Well I suppose the Fed can start buying houses in Calf. they can spend a trillion there and then move on to Florida and spend a trillion.
Just what is it in our new socialist society that protects debtors and punishes savers? I guess like everything socialist this is upside down.
I think Peter Schiff is right we are now officially a banana republic!
Dec. 16 (Bloomberg) -- The Federal Reserve cut the main U.S. interest rate to as low as zero for the first time and shifted its focus to the amount and type of debt it buys, seeking to revive credit and end the longest slump in a quarter- century.
By Peter Y. Hong December 17, 2008 Foreclosures continued to drag home prices to new lows in November, as the Southern California median sales price slid to $285,000, its first drop below $300,000 since 2003.
The November median price was down 34.5% from the same month last year, and 43.6% below the peak price of $505,000 recorded during several months in 2007,
<< <i>Just what is it in our new socialist society that protects debtors and punishes savers? I guess like everything socialist this is upside down.
I think Peter Schiff is right we are now officially a banana republic! >>
It strikes me that the solutions to our current economic woes are rather simple yet painful but political dogma exacerbates the problems by govt not correcting their errors and by not letting free markets work.
Construction materials (steel, aluminum, copper, etc.) are likely to remain unchanged to down for the first half to throughout the year until early 2010 as there are still considerable retrenching in the construction industry, including oil and gas as well as commercial site development.
Oil and Gas will be a little more managed and controlled by OPEC to maintain a price level that keeps them from bleeding, particularly by Venezuela. Vene needs $60 oil to maintain their social programs and subsidies and they are well behind already; people are getting rowdy down there. $60 just buys them a spot in line, it doesn't advance their well being so $60+ is not an option for them, it is a necessity. I suspect $60 will become the new benchmark and it will be less of a free floating, market driven rate and more of a controlled supply driven rate. The talk of alternative fuels in the US is just that...talk. No significant change in '09 and maybe even not in '10; we're still going to be foreign oil dependent.
Housing will continue depressed but I anticipate a new type of player/game here. I'm not sure what it is but I know people have to live somewhere and no one can afford to build apartments for all the people losing their homes so the times and situation are ripe for a new game. Maybe it is going to be public entities buying these distressed properties and doleing them out to displaced families that qualify, this seems to be the most likely extrapolation of the current situation and a great boon to advancing social or social-like programs. Look for prices to remain stagnant to lower for the entire '09 season but as always, the good properties are still good properties and will be in demand; all the lesser properties will be in play.
Public sector programs will be non-funded, eliminated, considerably reduced in their scope. Taxes will be down due to realestate, depressed retail sales, fewer miles driven, and this will affect tax revenues. BHO will be severely constrained in his social programs because he will have to divert the funding for many of his trickle up concepts to fund states and major metropolitan areas that will soon be going belly up ala California/New York. Look for considerable retoric and much public posturing with commensurate good will from the press to try and keep people optimistic but a pig with lipstick is still a pig. User taxes on everything from internet services to fishing licenses will skyrocket across the board ala New York's announcement yesterday but that will become the norm and not the exception. The expectations of the middle class will be considerably muted from their current optimism.
PM's will continue to rise. Gold has swung around the 850 mark for much of the year and it is likely to remain in this $100 +/- range from 850 for much of the early part of '09. I anticipate a break out before mid year but though optimistic of the 1K AU, there will be resistance by the big money players. I suspect most of the weak hands have been played and those that needed to cover other losses have tossed their metal into the great continuum already. The small player is not playing anymore, they will be accumulating and demand for hard metal will continue to be reflected in a possibly expanding spread between physical and paper but anyone playing short will have to brave indeed.
Successful stock players will be playing distressed companies, buying on the cheap and wishing for the best and using the gains for investment in majors like big blue and cat and aa, x, and the like; getting in position for '10. It would seem prudent to make small plays and use these gains to get a position in majors that are likely to pay good dividends in '10-'12. The day traders will still be day traders but those that want to have a portfolio that they manage for themselves are going to walk from the 401K programs because the matching contributions from employeers will probably be mostly gone by early '09. People will still work on stocks in '09 because most don't understand PM, will scoff at interest rates for CD's, and will not buy bonds or other public paper; they will buy buying stocks. This will mean the death of the large fund management houses both institutional and retirement fund managers; they will still be with us but in a much more diminished capacity.
Geopolitical crisis will be the daily headlines in '09 as opportunities are reduced, social programs are reduced, and desperation becomes more conspicuous. I would anticipate that much of the US will be spared from most of this but there will likely be a new political party or a new major player come to the forefront. There will be change but other than screwing with the forumulas, I doubt BHO can do anything more than change the degree of change and not the kind of change that it will take to redirect US society. There will be something completely new and different come to the political game in early to mid '10 and by the '12 elections we will see a complety different political landscape in the US.
We are still in a somewhat chaotic environment financially and politically as people and governments adapt to the still evolving scenarios. In the paraphrased words of a thread participant, you can not accurately predict the future because the future hasn't happened yet and the past is already gone; there is only now. For those that got in position early and are continuing to solidify their stance, life will still be good.
Geopolitical crisis will be the daily headlines in '09 as opportunities are reduced, social programs are reduced, and desperation becomes more conspicuous. I would anticipate that much of the US will be spared from most of this but there will likely be a new political party or a new major player come to the forefront. There will be change but other than screwing with the forumulas, I doubt BHO can do anything more than change the degree of change and not the kind of change that it will take to redirect US society. There will be something completely new and different come to the political game in early to mid '10 and by the '12 elections we will see a complety different political landscape in the US.
We are still in a somewhat chaotic environment financially and politically as people and governments adapt to the still evolving scenarios. In the paraphrased words of a thread participant, you can not accurately predict the future because the future hasn't happened yet and the past is already gone; there is only now. For those that got in position early and are continuing to solidify their stance, life will still be good.
Happy New Year >>
I have to assume you're another time traveller.
Change will finally come to the political landscape with or without the president elect. There's no certainty it will be a good thing since we've waited so long.
More and more people will surrender to 40 and 50 year mortgages thereby destroying what's left of property ownership and equity in this country. Similar to how people gave up and now rent ( they call it lease ) their cars and have zero equity, they'll do something similar in housing.
Once upon a time in America there was a certain sector of the population who would walk on a car lot, pick a car and ask, "can I get that for 100 a month?'. Price was secondary. Monthly payment was primary.
That's the norm in the auto business now whereas it was the exception then.
Remember my old dealer friend that said, "some day you will not be able to buy an ounce of gold from a dealer or on ebay"
Swiss gold bullion in huge demand as trust in banks dives Swiss gold refiners are having great difficulty in keeping up with demand for gold bullion leading to long delivery times as investors wary of other stores of wealth.
Author: Arnd Wiegmann and Lisa Jucca Posted: Wednesday , 17 Dec 2008
MENDRISIO/ZURICH, Switzerland (Reuters) -
Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.
This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.
"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.
The trigger for the price to rise again could come from a much weaker dollar, making gold cheaper for holders of other currencies, and a renewed aversion to paper assets as governments and central banks pump large amounts of cash into the economy, stoking inflation.
Customers buying gold bars, which can weigh more than 10 kg each, have to wait roughly a month, taking into account the year-end holiday season.
The one-kilo bar has become very popular," said Fiorenzo Arbini, in charge of health and safety at Pamp, another large Swiss refiner.
"People used to buy certificates, now they want physical gold."
Schnellmann said the Argor-Heraeus smelter is operating at full capacity, three eight-hour shifts a day. Conquering the backlog by hiring is difficult, because each candidate has to undergo a security check.
In what past decade did the last free market finally succumb? There are none today in the Wall Street playground arena where the Bernie Madoffs, Hank Paulsons, and Chris Coxes make the rules. From Ponzi, to Madoff, to the our present day fiat economy, social security scheme, etc. Just different slants on Ponzi. Just pay Richard off when Paul starts to squawk.
A poignant reminder on how far off old Warren was when it came to the value of gold. His quote concerning a hole in the ground is priceless. His daddy knew better. Even at 82 Richard Russell has plenty of wisdom to speak. He almost got off the gold train during the 2008 derailment but is back on it again. Those strong great depression roots show plainly through today.
Gold up 5.6% yoy and above water for 2008. Not much else can say that. Note that gold has closed higher every year since 2001 with 2008 only needing a close above $838 to extend it once again. Yes gold has done it's job well. The demise of gold has been quite overstated, as always, as has the "strength" in the dollar. A gold correction probably soon coming from here, but then quickly back on track to $900-$1000. From this point the moves can come quickly. $882-$887 is solid resistance coming from the 1980 high as well as late Dec 2008 - Jan 2009. Even the FED has stated they are starting to think about inflation again.
Take your pick from here for 2009: Gold, google, or the dollar.
My prediction for 2009 is that our leadership will continue to insist that our standard of living is, and of a right ought to be, maintained at the pre-recession levels, and that what we ought to be looking forward to is a restoration of those levels, the revivification of easy credit, and a resumption of national life-style of world-sustaining consumerism and debt.
I expect it will take beyond 2009 for the facts to become apparent.
Is the free market going to feed millions on the bread line?
Is a collective farm with Centralized Planning done by Washington bureaucrats going to do it? That didn't work very well in Russia during the '50s, '60s and '70s. I guess we'll find out, because Iowa & Illinois farmers will soon be told just how much corn they have to grow for ethanol production, while corn grown for food and feed will be reduced.
Gee, I hope there's plenty of margin for error in the mix. On the other hand, there must be some good that comes from a spike in tortilla prices - I just don't happen to see the "big picture", I guess.
Q: Are You Printing Money? Bernanke: Not Literally
We should all be accustomed to the violent nature of bear market rallies by now. The recent action in the Euro is probably just another example.
The YEN is also at the top of a very steep trend.
We will probably see some stability come into the currency markets over the next month or two. Japan will cut rates followed by Europe and then Australasia. The dollar will regain strength.
<< <i>My prediction for 2009 is that our leadership will continue to insist that our standard of living is, and of a right ought to be, maintained at the pre-recession levels, and that what we ought to be looking forward to is a restoration of those levels, the revivificaiton of easy credit, and a resumption of national life-style of world-sustaining consumerism and debt.
I expect it will take beyond 2009 for the facts to become apparent. >>
One of the problems with that is an ever increasing awareness of that by the countries who loan money .
It is sickening to watch the politicians sell us and everything here down the river just so they can borrow and steal for as long as they can.
GEAB N°30 is available! Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis' - Public announcement GEAB N°30 (December 16, 2008) -
LEAP/E2020 anticipates than the unfolding global systemic crisis will experience in March 2009 a new tipping point of similar magnitude to the September 2008 one. According to our team, at that period of the year, the general public will become aware of three major destabilizing processes at work in the global economy, i.e.:
• the length of the crisis • the explosion of unemployment worldwide • the risk of sudden collapse of all capital-based pension systems
A whole range of psychological factors will contribute to this tipping point: general awareness in Europe, America and Asia that the crisis has escaped from the control of every public authority, whether national or international; that it is severely affecting all regions of the world, even if some are more affected than others (see GEAB N°28); that it is directly hitting hundreds of millions of people in the “developed” world; and that it is only worsening as its consequences reveal throughout the real economy. National governments and international institutions only have three months left to prepare themselves to the next blow, one that could go along severe risks of social chaos. The countries which are not properly equipped to cope with a surge in unemployment and major risks on pensions will be seriously destabilized by this new public awareness.
In this 30th issue of the GEAB, the LEAP/E2020 team describes these three destabilizing processes (two of them are described in this public announcement) and gives recommendations to cope with the surge in risks. In addition, this issue also provides the opportunity to make an objective assessment of the reliability of LEAP/E2020's anticipations and specifies a number of methodological aspects of the analytical process used. In 2008, LEAP/E2020's success rate reaches 80%, and even 86% when it comes to strictly socio-econimic anticipations. In a year of major upheavals, our teal ise altogether quite proud of this result.
The crisis will last at least until the end of 2010 Evolution of the US money base and indications of related major US crisis periods (1910 – 2008) - Source: Federal Reserve Bank of Saint Louis / Mish’s Global Economic Analysis Evolution of the US money base and indications of related major US crisis periods (1910 – 2008) - Source: Federal Reserve Bank of Saint Louis / Mish’s Global Economic Analysis As we already explained in GEAB N°28, the crisis will affect in different ways the different regions of the world. However, and LEAP/E2020 wishes to be very clear on that aspect, contrary to the dominant stance today (coming from those experts who denied the fact that a crisis was coming up three years ago, who denied that it was global two years ago, and who denied the fact that it was systemic six months ago), we anticipate that the minimum duration of the decanting phase of the crisis is 3 years (1). It shall be finished neither in spring 2009, nor in summer 2009, nor at the beginning of 2010. It is only towards the end of 2010 that the situation will start stabilizing again and improving a little in some regions of the world, i.e. Asia and the Eurozone, as well as in countries producing energy, mineral and food commodities (2). Elsewhere, it will continue; in particular in the US and UK, and in all the countries depending on their economy, were the duration could approximate a decade. In fact these countries should not expect any real return to growth before 2018.
Moreover no one should imagine that the improvement at the end of 2010 will correspond to a return of high growth. The recovery will take long. For instance, stock markets will take a decade to return to levels comparable to 2007, if they ever return to that. Remember that it took twenty years before Wall Street resumed its 1920 levels. Well, according to LEAP/E2020, the present crisis is deeper and longer than in the 1930s. The general public will gradually become aware of the long-term aspect of this crisis in the coming three months and this situation will immediately trigger two tendencies carrying with them socio-economic instability: fear of the future and enhanced criticism towards leaders.
The risk of sudden collapse of all capital-based pension systems Finally, among the various consequences of the crisis for dozens of millions of people in the US, Canada, UK, Japan, Netherlands and Denmark in particular (3), there is the fact that, from the end of the year 2008 onward, news about major losses on the part of the organizations in charge of managing the financial assets supposed to finance pensions will multiply. The OECD anticipates that pension funds will lose 4,000 billion USD in 2008 only (4). In the Netherlands (5) as well as in the United Kingdom (6), monitoring organizations recently blew the whistle asking for an emergency contribution reappraisal and a State intervention. In the United States, growing numbers of announcements call for contribution increases and benefit reductions (7), knowing that it is only in a few weeks time that most of these funds will start calculating their total losses (8). Most of them are still deluding themselves about their capacity to build up again their capital after the markets turn around. In March 2009, when pension fund managers, pensioners and governments will become simultaneously aware of the fact that the crisis is there to last, that it coincides with the « baby-boomer » generation’s age of retirement and that the markets will not resume their 2007 levels until many long years (9), chaos will flood this sector and governments will reach the moment when they will be compelled to nationalize all these funds. And Argentina, who took this decision a few months ago already, will appear a pioneer.
All the trends described above are already at work. Their combination and the public becoming aware of the consequences they could entail, will result in the great collective psychological trauma of Spring 2009, when everyone will realize that we are all trapped into a crisis worse than in the 1930s and that there is no possible way out in the short-term. The impact on the world’s collective mentalities of people and policy-makers will be decisive and modify significantly the course of the crisis in its next stage. Based on greater disillusion and fewer beliefs, social and political instability will settle down worldwide.
Finally, this GEAB N°30 presents a series of 13 questions & answers designed to enhance savers'/investors'/decision-makers' capacity to understand and anticipate the next stages of the global systemic crisis: 1. Is this crisis different from the previous crises which affected capitalism? 2. Is this crisis different from the 1930s crisis? 3. Is the crisis as serious in Europe or Asia as in the USA? 4. Are the current actions undertaken by public authorities worldwide sufficient to curb the crisis? 5. What are the major risks still weighting on the world financial system? And are all savings equal in front of the crisis? 6. Is the Eurozone a true protection shield against the worst aspects of the crisis and what should the Eurozone do to improve its protection status? 7. Is the Bretton Woods system (in its 1970s last version) currently collapsing? Should the Euro take the place of the Dollar? 8. What can be expected from the next G20 meeting in London? 9. Do you think that deflation is right now the biggest threat to economies worldwide? 10. Do you think that the Obama administration will be able to prevent the USA from sinking into what you called the ‘Very Great US Depression’? 11. In terms of currencies, beyond your anticipation of the Dollar resuming its collapse in the very next months, do you think that the UK Pound and the Swiss Franc are still currencies with an international status? 12. Do you think that the CDS market is about to implode in the coming months? And what could be the consequences of such a phenomenon? 13. Is there a ‘US Treasury Bonds Bubble” about to burst?
--------- Notes:
(1) It can be useful to read on this crisis a very interesting contribution by Robert Guttmann published in the 2nd half of 2008 on the website Revues.org, supported by the Maison des Sciences de l'Homme Paris-Nord.
(2) As a matter of fact, commodities have already started contributing to boost the market of international sea transport. Source: Financial Times, 12/14/2008
(3) It is in those countries that capital-based pension systems were most developed (see GEAB N°23) but is also the case of Ireland. Source: Independent, 11/30/2008
Last summer when the dollar was in a deep rut Caterpillar and other manufacturers were actually starting to export products. Then came the credit crunch and a soaring dollar and the growth in exports ended.
It now looks like the FED lowered the discount rate to effect a devaluation of the dollar after determining that weakness gripping oil prices made it safe to do so at this time. A weak dollar should make US products cheaper and more competitive abroad again. Exports then could be part of the stimulus plan. At the same time, while oil is cheap we do not have to be concerned that energy prices will eat up declining domestic business revenues and disposable personal income.
But even with the dollar's slide over the last few weeks it remains far above its recent low.
Of course the European’s can quickly counter by lowering their interest rates.
Where does that leave gold? Continued volatility is my guess. I would not be surprised to see $950 or $750.
Construction materials (steel, aluminum, copper, etc.) stocks up through out 2009 in prep for 2010 inflation.
Oil and Gas, manipulated down to $35 a barrel and then headed back to $70 by end of 2009.
Housing, look for prices to remain stagnant to down for all of 2009. Nothing the Feds do will help any of this. Even if they reduce interest rates below 4% no new buyers will buy for fear of the depreciating values.
PM's, I look for Gold to test $1,000 again next year and possibly go to $1200 in crisis. Silver will follow far behind and might see $20. Plat. Will remain dead as car companies need little of this metal.
State bankruptcies or bailouts, several states with CA on the top of the list will go bankrupt next year or will have to be bailed out by the Feds for the tune of billions more printed dollars.
Stocks, will remain in a volatile trading range from 7,000’s on the DOW to above 9,000. It will be a great year to build a hard asset portfolio in senior miners, steels, cement, coal, oil, etc.
Inflation, basically dead for all of 2009 as more deflation sets in, but look out 2010.
Obama, billions and billions, perhaps trillions, of dollars worth of NEW NEW deal programs.
<< <i>Last summer when the dollar was in a deep rut Caterpillar and other manufacturers were actually starting to export products. Then came the credit crunch and a soaring dollar and the growth in exports ended.
It now looks like the FED lowered the discount rate to effect a devaluation of the dollar after determining that weakness gripping oil prices made it safe to do so at this time. A weak dollar should make US products cheaper and more competitive abroad again. Exports then could be part of the stimulus plan. At the same time, while oil is cheap we do not have to be concerned that energy prices will eat up declining domestic business revenues and disposable personal income.
But even with the dollar's slide over the last few weeks it remains far above its recent low.
Of course the European’s can quickly counter by lowering their interest rates.
Where does that leave gold? Continued volatility is my guess. I would not be surprised to see $950 or $750.
"I liked the way you laid this out." Thanks, GS, aka OP. Predicting the new year is always fun here. Predictions here have been suprisingly accurate, over the years. We need all the usual suspects to chime in and then we will have a better idea of the prognostication for '09.
with the "new" policy of the fed and treasury to "print money at all costs" (my term) won't that hurt the relative value of the dollar compared to the other currencies in the USD index?
deflate and reflate...it seems we have deflated rather quickly....i would expect a corresponding quick reflate with the monetary policies.
From Gata's Bill Murphy. No surprise that a former Goldman Sachs guy (and a US Treasury insider) is being selected to be the new head of the CFTC.
About 45 minutes before I was to leave for my meeting with Commissioner Bart Chilton of the U.S. Commodity Futures Trading Commission, this news hit the tape:
"Obama to appoint Gary Gensler to lead Commodities Futures Trading Commission -- AP."
Gensler is a former undersecretary of the treasury and assistant secretary of the treasury.
Gensler is a Goldman Sachs alum and a Treasury man. Obama is putting one of the key figures in the Gold Cartel scheme into the top role at the CFTC. Talk about the fox guarding the henhouse! But the bad news might be good news.
My meeting with Chilton went on as scheduled and lasted about 50 minutes. The surprise was that three others from the CFTC staff attended, including the deputy general counsel. One of the other staffers had already viewed the video of GATA's Gold Rush 21 conference.
Chilton listened intently, took notes, as did one of the others, and asked many questions. I laid out GATA's presentation. I am not going to get into all the details, as we will see what takes place in the months to come. But I chuckled when telling them that if they really wanted to comprehend what the gold price suppression scheme is all about, all they have to do is go to their new chairman -- at the right time. No one knows what is going on better than he does.
I did not hold back. I said the main culprit of the Gold Cartel was our own government, which has been in league with bullion banks like JPMorganChase.
Naturally, I drew parallels to the Madoff scandal and how the Securities and Exchange Commission ignored nine years' worth of probable cause to suspect a Ponzi scheme. I also laid out how and why what is occurring in gold and silver could lead to a much bigger scandal if the price suppression scheme is not stopped -- and that is because the Gold Cartel is running out of the gold needed to meet the growing annual deficit between supply and demand.
I was very impressed with Chilton, and he said my trip to Washington would not be in vain.
There are two things for sure. First, as in the Madoff scandal, no one can say the powers that be didn't get the scoop, the facts about the gold price suppression scheme -- what has happened and why. And second, if there is one person in Washington who will try to get to the truth about gold, this is the man.
GEAB N°30 is available! Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis' - Public announcement GEAB N°30 (December 16, 2008) -
LEAP/E2020 anticipates than the unfolding global systemic crisis will experience in March 2009 a new tipping point of similar magnitude to the September 2008 one. According to our team, at that period of the year, the general public will become aware of three major destabilizing processes at work in the global economy, i.e.:
• the length of the crisis • the explosion of unemployment worldwide • the risk of sudden collapse of all capital-based pension systems
Interesting read! It truly shows that this deep recession/depression is global and has the potential to be a nightmare....deeper than the 1930's version. The landscape will be full sharks preying on the unprepared. But then again, how can one truly prepare for such a world disaster.
Another catalyst that I didn't see in the artcle is a terriost event that shuts down America which gets the ball rolling....off the cliff.
with the "new" policy of the fed and treasury to "print money at all costs" (my term) won't that hurt the relative value of the dollar compared to the other currencies in the USD index?
deflate and reflate...it seems we have deflated rather quickly....i would expect a corresponding quick reflate with the monetary policies. >>
Possibly.
But as I see it, other countries will also have to print, print, print. Our efforts are already 1 year ahead of Europe which was still raising rates as late as this summer. European banks are still much more highly leveraged than in the USA. If you were to place a bet on which global region can emerge from a recession first, where would you place it?
But the bigger picture as I see it. We can print, print, print, all we want, but if there is no demand for the money does it really matter? I believe we and probably the world have reached peak economic demand. Through the fall of communism and the effort of China to be the factory to the world, 1 BILLION people have entered the economy in the past 20 years. The demands of those created an economic boom that we may never witness again.
The USA enjoyed tremendous growth from the late 1940's to present on the demands of the baby boomers. Think of the addition of China and the Eastern Bloc countries as a GIANT WORLDWIDE baby boom. Now, the demands of that group have been largely met. The difference now is that those demands are changing. Now the demand is not geared toward building the economy, but rather taking from it.
How do we build the economic engine...through demand, hence through demographics. Where are the demographics going to come from? USA, Europe, China? These 3 largest economies have stable to negative domestic population growth. Only the poorest regions of the world have positive population growth. That sounds more like a demand ON the economies, rather than a demand FOR the economies.
Regarding oil prices.......Bursting bubbles are usually completed after an 80-90% drop. So look for oil to bottom between $15 and $30. I do not believe it will get over $50.
I suppose while we are making predictions I may as well throw out a thought on the stock market. The pundits all say that this economic downturn is as severe as the 1972-1982 period. During that time the DOW traded for about 1x book value. I'll leave it to you to figure out the present book value of the DOW.
There may also be 200 million very unhappy Chinese if the global economic engine doesnt restart. I will also let you consider those repercussions.
Did anyone catch Dick Morris' prediction of the next 3-6 years?
Next 1-2 years: deflation 1-2 years later: high inflation 1-2 years after that: gov't intervention on inflation, i.e. high interest rates. and after that: US is AOK.
I think he has the sequence right. I'm not sure the timeline. The timeline may be longer due to global nature of this deep doodoo.
He also predicted BHO's approval rating will be where GW is now.
<< <i> Next 1-2 years: deflation 1-2 years later: high inflation 1-2 years after that: gov't intervention on inflation, i.e. high interest rates. and after that: US is AOK >>
I think it will play out the same way (though the timeframe may be different)
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
There's one thing I had never considered before. It's always been very apparent that it would probably "never" be in the best interest of the US and most of the developed world to go to the gold standard except as, possibly, a temporary measure to get through a crisis.
But now I'm wondering if it might be within the interests of one of the newer global players to do so. It's not impossible that such a currency could become the new reserve currency.
Holding the price of gold and commodities down would seem to increase the chances of this occuring since it suppresses the price and increases the need.
This would be against the interests of this country and destabilizing in the long term.
<< <i>Did anyone catch Dick Morris' prediction of the next 3-6 years?
Next 1-2 years: deflation 1-2 years later: high inflation 1-2 years after that: gov't intervention on inflation, i.e. high interest rates. and after that: US is AOK.
I think he has the sequence right. I'm not sure the timeline. The timeline may be longer due to global nature of this deep doodoo.
He also predicted BHO's approval rating will be where GW is now.
And, the talk radio heads will be off the air.
Ren >>
Hes a quack, but lets say hes right.
Deflation---prices drop 50-75%. Inflation---Prices rise 100-200%
Net result.... We are right back to where we are today. Why own anything? Thats why the flight to Treasuries.
Net result.... We are right back to where we are today. Why own anything? Thats why the flight to Treasuries. >>
You can't eat treasuries and you can't eat good intentions.
Everything's price is determined by psychology. Rushing into treasuries makes sense so long as the prices of everything are imploding but eventually buyers will ask themselves just what is backing the value of these. So long as the crops are planted and people have money to buy the necessities which are mostly made in China then treasuries are solid gold.
The real problem is that these debts are mostly founded on the ability of the gov- ernment to tax. This ability will erode as the crisis deepens and the tax base shrinks.
Treasuries were too high before this mess started and spiking upward is not good when seen in the light of exploding debt and shrinking production.
The die was cast even before Reagan and the FED artificially used interest rates to curb inflation. The forces that are inflation have continued to build out of sight. Spend- ing has grown out of control despite the massively improved productivity and the init- ial improvements in efficiency caused by increased global trade.
These chickens are coming home to roost and the economy will continue the tailspin until they are addressed and accounted for. It is impossible to maintain the staus quo when it involves breaking the laws of nature. We can't consume more commodities than are produced and we can't produce much with a third rate educational system. We can't return to the way things were, but on the bright side, they never should have been that way.
The government should be leading by example. They should be cutting spending and investing in infrastructure. This should be not only rebuilding of failing systems but new systems such as intercity rapid transit. We need to focus on the future and cut our losses with the past.
If this recession is deep then our problem might be worst when the rest of the world recovers and we're still living in the 1960's.
"The real problem is that these debts are mostly founded on the ability of the gov- ernment to tax. This ability will erode as the crisis deepens and the tax base shrinks."
<< <i>"The real problem is that these debts are mostly founded on the ability of the gov- ernment to tax. This ability will erode as the crisis deepens and the tax base shrinks."
Astute observation. >>
Very true.
Difference is one region taxes its citizens at 30% while the other at 60%. Unless Europe begins to tax the taxes, they dont stand a chance.
$33 oil is WAY too cheap...... I sure don't understand how it can be this low. Time to cash in my meager PM holdings and start my own strategic reserve......!
And speaking of the price of oil..... I wonder where all the protesters are that earlier in the year were outraged that the oil companies were making profits...... ?I haven't heard any of them expressing any concern from them that the oil companies may now not be making any or little profit??
there have been tales of tankers filled and sitting, not going anywhere as storage for when the price does eventually go back up. why no conspiracy thoeries here (like gold and silver?)
i was thinking as a filled my tank yesterday....what is the cost of a barrel of oil from out of the wellhead, transport, refinery, delivery to the station and station costs? it must be well over $30.
<< <i>"Oil and Gas, manipulated down to $35 a barrel and then headed back to $70 by end of 2009."
WOW that was quick, oil down to $33.87 yesterday maybe I should change this to $25.00?
It's amazing how we all are using 75% less energy than just a few months ago?
Gee a worldwide crises gone just like that. >>
GS, you are thinking linear. Just like oil consumption did not increase 1000% from 1998 to 2008, it did not decrease 75%. Prices do not move in a linear fashion to demand. Oil will probably bottom in the mid 20s. this will still represent more than a doubling over 10 years, or a 6-8% annual increase. That is more in line with the inflation rate.
You and I will never see $150 oil again. Any dramatic increases from here on out will be met with rapid demand destruction and increasingly efficient energy usage.
"mhammerman...good projections, where in 'Vegas can i play that senario? "
Hey, you don't have to gamble, play things that are likely to do you some good. Well, for example, you can play distressed stocks with your tdameritrade and buy majors (I'm thinking Marathon because it's cheap). I'm thinking you can get good production based companies that have actual assets that make something you can use and you can get these stocks at 20%30% of their 52 week highs. Get a pocket full of $1 stocks for a few hundred dollars and just sit on them and work them into a postion in some majors.
You can play metal with your own wherewithall. Be sure that your receipt notes cash and you should get cash getting out also if you trade with the same guy...cash in-cash out, what happens at the coin shop stays at the coin shop. US Eagles are best but they have a premium, that's why they are the best. If push comes to shove, a fractional gold eagle or handfull of silver eagles will be quite liquid and at a premium. Best to do this kind of business face to face and not with the internet because you can build an easy relationship and develop a little routine with somebody. Just call someone up and ask what they are getting for a ase and then ask them what they are getting for something else and you will see that the premium is on the ase coming and getting out as well. Foreign stuff is just that...foreign.
You can be aware of the tax situation; with decreasing revenues, they are going to tax those that they can with more user taxes so try and get it back on the other side by taking pretax deductions for medical and transportation and be sure to donate to 501 C-3 non-profits to lower your taxes even more and that way, you can support those things that you think are worthy of your buks...don't be a tax magnet, get out of the way and you won't have to participate in this madness. If you're thinking of buying a car, now is a good time but don't pay more than 4% for the note and drag it out for 3 or 4 years, it's cheap money same with a house. Your existing house, refi to 5% and slip it into a 15 yr note for the same monthly money as a 30 at 6.5...more upfront interest = more tax deduction...it's all good.
Oh, yeah I forgot to mention a little tidbit I came across during my work...No one is buying municipal bonds or public construction bonds, anywhere. The money to lend on bonds is simply not there so don't look for any big public projects at the municipal/county level 'cause it is not there right now. No one is going to loan precious cash on bond funded construction projects so just keep your hands in your pocket on this stuff.
For me, no bonds except for inflation linked bonds, no municipal bonds, no fed paper of any kind, no paper except for the stock plays listed above. Here's the tale of the tape for the YTD for my fund that I participate in. This fund has a number of self directed management options and I chose inflation linked bonds in January, after digesting the prognostications on our thread:
stock account (mirrors DOW) -40.97% global equities -43.61% growth -40.73% equity index -38.75% social choice -24.35% INFLATION LINKED BOND -0.12% realestate -10.84%
So, I came out of it very good as my only goal was to NOT LOSE MONEY. I was suprised that the social choice worked out at only -24...those bleeding liberals usually run as soon as things get wonkey but they hung in there.
Oh well...be good and keep your green on your your side of the line. Good luck in '09 but I'm thinking it is sure starting out to be a lackluster year. Getting in position for '10/'12 is my thinking.
<< <i> 13. Is there a ‘US Treasury Bonds Bubble” about to burst? >>
How appropriate this should be #13.
This is likely to be a (the) trigger and it is probably the result of central banks holding commoditys' prices back.
Leadership still appears to be weak, tentative, and misdirected. >>
Let me see, people are scrambling to "invest" in something that pays them no interest and is succeptable to loss of purchasing power through massive amounts of monoploy money being cranked out on a daily basis. Sures sounds like the Lemmings have found a new place to "invest" their money.
“there have been tales of tankers filled and sitting”
Well how about completely filling the SPR while they are desperate to move this stuff?
Lets offer $25 per barrel for a large bulk purchase and use the TARP money to pay!
“You and I will never see $150 oil again.”
Dave my friend, you and I will have to part ways on this idea. I think we will see $150 within 24 months. I think we are going to see some form of hyperinflation, the dollar will drop like a stone, and our cost will go right back up. We shall see.
I disagree on the hyperinflation and the dollar dropping. This is not just a US problem and Europe has similar issues. If we both face the same problems and use somewhat similar fixes, then the dollar will hold its value against the euro and pound, among others. I do not see a country where the currency will be so strong as to cause hyperinflation with respect to either the dollar or the euro. It is all about relative value. Since the meltdown and bailouts here the dollar has strengthened against the euro and pound, recently giving back some to the euro, but still 15% (+/-) ahead of where it was earlier in the year.
Retired United States Mint guy, now working on an Everyman Type Set.
<< <i>I disagree on the hyperinflation and the dollar dropping. This is not just a US problem and Europe has similar issues. If we both face the same problems and use somewhat similar fixes, then the dollar will hold its value against the euro and pound, among others. I do not see a country where the currency will be so strong as to cause hyperinflation with respect to either the dollar or the euro. It is all about relative value. Since the meltdown and bailouts here the dollar has strengthened against the euro and pound, recently giving back some to the euro, but still 15% (+/-) ahead of where it was earlier in the year. >>
In my opinion, the strengthening of the US dollar is just a temporary bounce, due to everyone deleveraging their assets and running into supposed 'strong' US dollars.
Considering Fundamentals alone, the US dollar is headed drastically lower.
In fact, I believe the US Fed is purposely intending this to happen as this is the only way the US can get out of their debt obligations.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
What major modern world city could be in this much trouble?
Read the clues and then scroll down:
Prisoners in jail don't want to be released; some who do get out promptly re-offend to head back where there's heat, medical care and feed every day. We see guys make a conscious decision they'll be better off in prison than in the community, homeless and hungry,"
There is no hurricane or other natural disaster to blame for problems here.
The jobless rate has climbed past 21 percent, the embattled schools just fired the superintendent, tens of thousands of homes and stores are derelict and abandoned.
Just one charity food program serves 41,000 people a month.
This cities population has gone from a peak of 1.8 million in the 1950s to half that now.
One apartment complex, for the elderly, is being built barely a block from two grade schools recently abandoned by the city, and now sitting empty and ransacked.
Then there's the vast area of decaying neighborhoods, with weedy, trash-strewn lots and vacant, burned-out houses. Hundreds of urban vegetable gardens citywide that have taken root on land cleared after the razing of abandoned homes.
The city's deficit is approaching 300 million U.S. dollars, the schools face a deficit of more than $400 million. Several dozen schools have been closed in the past three years.
Trying to combat its blight, this city has applied for $47 million from its central government for neighborhood stabilization money, with half earmarked to tear down more than 2,300 vacant homes.
About 44,000 of the 67,000 homes that have gone into foreclosure since 2005 remain empty.
Overall, the residential market is catastrophic, with the average price of a home in the city at $18,513.
there have been tales of tankers filled and sitting, not going anywhere as storage for when the price does eventually go back up. why no conspiracy thoeries here (like gold and silver?)
I believe there are some conspiracies involved in crashing the price of oil just as gold was at the same time. Just follow it to those who would benefit. The whole commodity complex was targeted to bolster the USD and make the profiteers billions by shorting. The hedge funds never had a chance.
Goldsaint, I agree. We will see $150 oil, $1033 gold, $21 silver, and many other cyclical high commodities prices in the near future. I would not be surprised to see $200+ oil on the next stronger 1/2 cycle of the commodities boom.
the big "D" word when it comes to the USD (devaluation that is) -
and get to pay back all those loans with cheaper dollars, most dont have savings anyway, so dollar denominated savings losses will be offset with far greater gains in paying down your debt....
and the flow of capital will start,
and regulation will prohibit any more bad borrowers from getting loans.....
Ok, someone here does not understand the impact of currency devaluation on debt reduction. If you live in the US and have dollar denominated debts, devaluation has no impact on retiring your debt. If you reside abroad, you would take a loss on all dollar denominated investments as the dollar would be worth less in your home currency, but a US debtor would not save a nickel in paying off any dollar obligations held abroad—unless the US debtor had income abroad paid in foreign currencies that could be converted to dollars at more favorable exchange rates.
Contrast this with inflation, where dollars become worth less in the US so that you would be paying off your debts more cheaply. If we had hyperinflation per Zimbabwe, you might be able to pay off your mortgage for the price of a postage stamp.
What devaluation of the dollar does do that can be helpful is to make US manufactured and agricultural products cheaper abroad, which would stimulated export sales and help the US economy. Offsetting this would be that essential products that we import like oil would be more expensive.
Also foreign investors might perceive US companies as being cheap and therefore good acquisition targets.
GOLD NEWS ASSET OF LAST RESORT Swiss gold bullion in huge demand as trust in banks dives Swiss gold refiners are having great difficulty in keeping up with demand for gold bullion leading to long delivery times as investors wary of other stores of wealth.
Author: Arnd Wiegmann and Lisa Jucca Posted: Wednesday , 17 Dec 2008
MENDRISIO/ZURICH, Switzerland (Reuters) -
Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.
This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.
"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.
The trigger for the price to rise again could come from a much weaker dollar, making gold cheaper for holders of other currencies, and a renewed aversion to paper assets as governments and central banks pump large amounts of cash into the economy, stoking inflation.
Smoke billows as the molten gold, like glowing butter, is poured. To cool it, the worker drops it into water. It hisses as it hits. Once hardened in moulds, the gold bars are embossed with the refinery's seal. Workers wearing white gloves stack them into boxes like domino pieces.
Though Switzerland is not a gold miner, it is home to some of the world's largest refineries, which process an estimated 40 percent of all newly mined gold.
Argor-Heraeus is part-owned by the Austrian Mint and a subsidiary of Germany's Commerzbank. Commercial and central banks are its chief customers and it says it processes some 350-400 tonnes of gold and 350 tonnes of silver per year.
Customers buying gold bars, which can weigh more than 10 kg each, have to wait roughly a month, taking into account the year-end holiday season.
For those buying coins or ingots, which can fit into the palm of a hand, the delay is six to eight weeks. A year ago, these small products could be had within a couple of days.
Worries about the banking system globally have boosted worldwide demand for physical gold, the Gold Council said.
"Many (people) are afraid of leaving their money in banks," said Sandra Conway, managing director at ATS Bullion in London, which sells bullion and gold coins to institutions and the retail market.
"It's difficult to quantify, but I would say our turnover over the last three months has certainly doubled compared to the previous three months," she said.
FULL CAPACITY
Other Swiss gold refiners also say business is booming.
"Since the summer we have experienced a sharp rise in demand for certain gold products. The one-kilo bar has become very popular," said Fiorenzo Arbini, in charge of health and safety at Pamp, another large Swiss refiner.
"People used to buy certificates, now they want physical gold."
Schnellmann said the Argor-Heraeus smelter is operating at full capacity, three eight-hour shifts a day. Conquering the backlog by hiring is difficult, because each candidate has to undergo a security check.
Gold refiners were established in Switzerland to supply the watch industry and, later, jewellery-makers in Italy.
Switzerland's largest banks stepped in to replace a void in gold trading while the London gold market was shut after World War Two and again during a brief closure in 1968.
The former Soviet Union, another top gold producer, chose Zurich banks to handle most of its gold sales in the 1970s and 1980s.
"Gold has an image of being the asset of last resort. This could be viewed as old-fashioned but this is how enough people with enough money to matter think," said Stephen Briggs, a metals strategist at RBS Global Banking & Markets.
GOLD TOUCH
India, China and the Middle East remain the biggest gold importers, particularly for jewellery. But demand for physical gold has exploded also in Europe, the Gold Council said.
In Switzerland, home to the world's largest private banking industry, demand for gold bars and coins shot up six-fold to 21 tonnes in the third quarter of 2008, more than in any other European country.
Retail investment in gold rose 121 percent in the third quarter of 2008, an important contributor to the overall increase in global demand, the Gold Council said.
In that period purchases of gold bars by retail investors, who often buy through commercial banks, rose nearly 60 percent, notably in Switzerland, Germany, and the United States.
There was a surge of interest among professional investors shortly after the collapse of Lehman Brothers in September.
Private bank Julius Baer in October launched a fund to invest exclusively in gold bars stored in highly secured vaults in Switzerland.
"The fascination with gold has been there since the beginning of civilisation," said Schnellmann. "It cannot be explained: you can't eat gold, you cannot build anything resistant with it and yet people want to hoard it." (Additional reporting by Pratima Desai in London; Editing by Catherine Bosley and Sara Ledwith)
Comments
Just what is it in our new socialist society that protects debtors and punishes savers?
I guess like everything socialist this is upside down.
I think Peter Schiff is right we are now officially a banana republic!
Dec. 16 (Bloomberg) -- The Federal Reserve cut the main U.S. interest rate to as low as zero for the first time and shifted its focus to the amount and type of debt it buys, seeking to revive credit and end the longest slump in a quarter- century.
By Peter Y. Hong
December 17, 2008
Foreclosures continued to drag home prices to new lows in November, as the Southern California median sales price slid to $285,000, its first drop below $300,000 since 2003.
The November median price was down 34.5% from the same month last year, and 43.6% below the peak price of $505,000 recorded during several months in 2007,
Time for our 2009 predictions.
Lets hear them, I will be back with mine later today.
Terry
<< <i>Just what is it in our new socialist society that protects debtors and punishes savers?
I guess like everything socialist this is upside down.
I think Peter Schiff is right we are now officially a banana republic! >>
It strikes me that the solutions to our current economic woes are rather simple yet painful but political dogma exacerbates the problems by govt not correcting their errors and by not letting free markets work.
Construction materials (steel, aluminum, copper, etc.) are likely to remain unchanged to down for the first half to throughout the year until early 2010 as there are still considerable retrenching in the construction industry, including oil and gas as well as commercial site development.
Oil and Gas will be a little more managed and controlled by OPEC to maintain a price level that keeps them from bleeding, particularly by Venezuela. Vene needs $60 oil to maintain their social programs and subsidies and they are well behind already; people are getting rowdy down there. $60 just buys them a spot in line, it doesn't advance their well being so $60+ is not an option for them, it is a necessity. I suspect $60 will become the new benchmark and it will be less of a free floating, market driven rate and more of a controlled supply driven rate. The talk of alternative fuels in the US is just that...talk. No significant change in '09 and maybe even not in '10; we're still going to be foreign oil dependent.
Housing will continue depressed but I anticipate a new type of player/game here. I'm not sure what it is but I know people have to live somewhere and no one can afford to build apartments for all the people losing their homes so the times and situation are ripe for a new game. Maybe it is going to be public entities buying these distressed properties and doleing them out to displaced families that qualify, this seems to be the most likely extrapolation of the current situation and a great boon to advancing social or social-like programs. Look for prices to remain stagnant to lower for the entire '09 season but as always, the good properties are still good properties and will be in demand; all the lesser properties will be in play.
Public sector programs will be non-funded, eliminated, considerably reduced in their scope. Taxes will be down due to realestate, depressed retail sales, fewer miles driven, and this will affect tax revenues. BHO will be severely constrained in his social programs because he will have to divert the funding for many of his trickle up concepts to fund states and major metropolitan areas that will soon be going belly up ala California/New York. Look for considerable retoric and much public posturing with commensurate good will from the press to try and keep people optimistic but a pig with lipstick is still a pig. User taxes on everything from internet services to fishing licenses will skyrocket across the board ala New York's announcement yesterday but that will become the norm and not the exception. The expectations of the middle class will be considerably muted from their current optimism.
PM's will continue to rise. Gold has swung around the 850 mark for much of the year and it is likely to remain in this $100 +/- range from 850 for much of the early part of '09. I anticipate a break out before mid year but though optimistic of the 1K AU, there will be resistance by the big money players. I suspect most of the weak hands have been played and those that needed to cover other losses have tossed their metal into the great continuum already. The small player is not playing anymore, they will be accumulating and demand for hard metal will continue to be reflected in a possibly expanding spread between physical and paper but anyone playing short will have to brave indeed.
Successful stock players will be playing distressed companies, buying on the cheap and wishing for the best and using the gains for investment in majors like big blue and cat and aa, x, and the like; getting in position for '10. It would seem prudent to make small plays and use these gains to get a position in majors that are likely to pay good dividends in '10-'12. The day traders will still be day traders but those that want to have a portfolio that they manage for themselves are going to walk from the 401K programs because the matching contributions from employeers will probably be mostly gone by early '09. People will still work on stocks in '09 because most don't understand PM, will scoff at interest rates for CD's, and will not buy bonds or other public paper; they will buy buying stocks. This will mean the death of the large fund management houses both institutional and retirement fund managers; they will still be with us but in a much more diminished capacity.
Geopolitical crisis will be the daily headlines in '09 as opportunities are reduced, social programs are reduced, and desperation becomes more conspicuous. I would anticipate that much of the US will be spared from most of this but there will likely be a new political party or a new major player come to the forefront. There will be change but other than screwing with the forumulas, I doubt BHO can do anything more than change the degree of change and not the kind of change that it will take to redirect US society. There will be something completely new and different come to the political game in early to mid '10 and by the '12 elections we will see a complety different political landscape in the US.
We are still in a somewhat chaotic environment financially and politically as people and governments adapt to the still evolving scenarios. In the paraphrased words of a thread participant, you can not accurately predict the future because the future hasn't happened yet and the past is already gone; there is only now. For those that got in position early and are continuing to solidify their stance, life will still be good.
Happy New Year
Is the free market going to feed millions on the bread line?
CG
<< <i>
Geopolitical crisis will be the daily headlines in '09 as opportunities are reduced, social programs are reduced, and desperation becomes more conspicuous. I would anticipate that much of the US will be spared from most of this but there will likely be a new political party or a new major player come to the forefront. There will be change but other than screwing with the forumulas, I doubt BHO can do anything more than change the degree of change and not the kind of change that it will take to redirect US society. There will be something completely new and different come to the political game in early to mid '10 and by the '12 elections we will see a complety different political landscape in the US.
We are still in a somewhat chaotic environment financially and politically as people and governments adapt to the still evolving scenarios. In the paraphrased words of a thread participant, you can not accurately predict the future because the future hasn't happened yet and the past is already gone; there is only now. For those that got in position early and are continuing to solidify their stance, life will still be good.
Happy New Year >>
I have to assume you're another time traveller.
Change will finally come to the political landscape with or without
the president elect. There's no certainty it will be a good thing since
we've waited so long.
Once upon a time in America there was a certain sector of the population who would walk on a car lot, pick a car and ask, "can I get that for 100 a month?'. Price was secondary. Monthly payment was primary.
That's the norm in the auto business now whereas it was the exception then.
It will become the norm in housing.
Pathetic.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Desperation Coming?
Remember my old dealer friend that said, "some day you will not be able to buy an ounce of gold from a dealer or on ebay"
Swiss gold bullion in huge demand as trust in banks dives
Swiss gold refiners are having great difficulty in keeping up with demand for gold bullion leading to long delivery times as investors wary of other stores of wealth.
Author: Arnd Wiegmann and Lisa Jucca
Posted: Wednesday , 17 Dec 2008
MENDRISIO/ZURICH, Switzerland (Reuters) -
Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.
This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.
"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.
The trigger for the price to rise again could come from a much weaker dollar, making gold cheaper for holders of other currencies, and a renewed aversion to paper assets as governments and central banks pump large amounts of cash into the economy, stoking inflation.
Customers buying gold bars, which can weigh more than 10 kg each, have to wait roughly a month, taking into account the year-end holiday season.
The one-kilo bar has become very popular," said Fiorenzo Arbini, in charge of health and safety at Pamp, another large Swiss refiner.
"People used to buy certificates, now they want physical gold."
Schnellmann said the Argor-Heraeus smelter is operating at full capacity, three eight-hour shifts a day. Conquering the backlog by hiring is difficult, because each candidate has to undergo a security check.
<< <i> not letting free markets work
Is the free market going to feed millions on the bread line?
CG >>
We'll never know. The polls won't let the markets work. More government is the solution. Just ask them.
Sir Richard speaks on Buffet's daddy
A poignant reminder on how far off old Warren was when it came to the value of gold. His quote concerning a hole in the ground is priceless. His daddy knew better. Even at 82 Richard Russell has plenty of wisdom to speak. He almost got off the gold train during the 2008 derailment but is back on it again. Those strong great depression roots show plainly through today.
Gold up 5.6% yoy and above water for 2008. Not much else can say that. Note that gold has closed higher every year since 2001 with 2008 only needing a close above $838 to extend it once again. Yes gold has done it's job well. The demise of gold has been quite overstated, as always, as has the "strength" in the dollar. A gold correction probably soon coming from here, but then quickly back on track to $900-$1000. From this point the moves can come quickly. $882-$887 is solid resistance coming from the 1980 high as well as late Dec 2008 - Jan 2009. Even the FED has stated they are starting to think about inflation again.
Take your pick from here for 2009: Gold, google, or the dollar.
roadrunner
Yes, that sums it up very well.
There's three camps out there and I know which one I belong to.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
I expect it will take beyond 2009 for the facts to become apparent.
Here's a warning parable for coin collectors...
Knowledge is the enemy of fear
Is a collective farm with Centralized Planning done by Washington bureaucrats going to do it? That didn't work very well in Russia during the '50s, '60s and '70s. I guess we'll find out, because Iowa & Illinois farmers will soon be told just how much corn they have to grow for ethanol production, while corn grown for food and feed will be reduced.
Gee, I hope there's plenty of margin for error in the mix. On the other hand, there must be some good that comes from a spike in tortilla prices - I just don't happen to see the "big picture", I guess.
I knew it would happen.
The YEN is also at the top of a very steep trend.
We will probably see some stability come into the currency markets over the next month or two. Japan will cut rates followed by Europe and then Australasia. The dollar will regain strength.
Knowledge is the enemy of fear
<< <i>My prediction for 2009 is that our leadership will continue to insist that our standard of living is, and of a right ought to be, maintained at the pre-recession levels, and that what we ought to be looking forward to is a restoration of those levels, the revivificaiton of easy credit, and a resumption of national life-style of world-sustaining consumerism and debt.
I expect it will take beyond 2009 for the facts to become apparent. >>
One of the problems with that is an ever increasing awareness of that by the countries who loan money .
It is sickening to watch the politicians sell us and everything here down the river just so they can borrow and steal for as long as they can.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
Linky
GEAB N°30 is available! Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis'
- Public announcement GEAB N°30 (December 16, 2008) -
LEAP/E2020 anticipates than the unfolding global systemic crisis will experience in March 2009 a new tipping point of similar magnitude to the September 2008 one. According to our team, at that period of the year, the general public will become aware of three major destabilizing processes at work in the global economy, i.e.:
• the length of the crisis
• the explosion of unemployment worldwide
• the risk of sudden collapse of all capital-based pension systems
A whole range of psychological factors will contribute to this tipping point: general awareness in Europe, America and Asia that the crisis has escaped from the control of every public authority, whether national or international; that it is severely affecting all regions of the world, even if some are more affected than others (see GEAB N°28); that it is directly hitting hundreds of millions of people in the “developed” world; and that it is only worsening as its consequences reveal throughout the real economy. National governments and international institutions only have three months left to prepare themselves to the next blow, one that could go along severe risks of social chaos. The countries which are not properly equipped to cope with a surge in unemployment and major risks on pensions will be seriously destabilized by this new public awareness.
In this 30th issue of the GEAB, the LEAP/E2020 team describes these three destabilizing processes (two of them are described in this public announcement) and gives recommendations to cope with the surge in risks. In addition, this issue also provides the opportunity to make an objective assessment of the reliability of LEAP/E2020's anticipations and specifies a number of methodological aspects of the analytical process used. In 2008, LEAP/E2020's success rate reaches 80%, and even 86% when it comes to strictly socio-econimic anticipations. In a year of major upheavals, our teal ise altogether quite proud of this result.
The crisis will last at least until the end of 2010
Evolution of the US money base and indications of related major US crisis periods (1910 – 2008) - Source: Federal Reserve Bank of Saint Louis / Mish’s Global Economic Analysis
Evolution of the US money base and indications of related major US crisis periods (1910 – 2008) - Source: Federal Reserve Bank of Saint Louis / Mish’s Global Economic Analysis
As we already explained in GEAB N°28, the crisis will affect in different ways the different regions of the world. However, and LEAP/E2020 wishes to be very clear on that aspect, contrary to the dominant stance today (coming from those experts who denied the fact that a crisis was coming up three years ago, who denied that it was global two years ago, and who denied the fact that it was systemic six months ago), we anticipate that the minimum duration of the decanting phase of the crisis is 3 years (1). It shall be finished neither in spring 2009, nor in summer 2009, nor at the beginning of 2010. It is only towards the end of 2010 that the situation will start stabilizing again and improving a little in some regions of the world, i.e. Asia and the Eurozone, as well as in countries producing energy, mineral and food commodities (2). Elsewhere, it will continue; in particular in the US and UK, and in all the countries depending on their economy, were the duration could approximate a decade. In fact these countries should not expect any real return to growth before 2018.
Moreover no one should imagine that the improvement at the end of 2010 will correspond to a return of high growth. The recovery will take long. For instance, stock markets will take a decade to return to levels comparable to 2007, if they ever return to that. Remember that it took twenty years before Wall Street resumed its 1920 levels. Well, according to LEAP/E2020, the present crisis is deeper and longer than in the 1930s. The general public will gradually become aware of the long-term aspect of this crisis in the coming three months and this situation will immediately trigger two tendencies carrying with them socio-economic instability: fear of the future and enhanced criticism towards leaders.
The risk of sudden collapse of all capital-based pension systems
Finally, among the various consequences of the crisis for dozens of millions of people in the US, Canada, UK, Japan, Netherlands and Denmark in particular (3), there is the fact that, from the end of the year 2008 onward, news about major losses on the part of the organizations in charge of managing the financial assets supposed to finance pensions will multiply. The OECD anticipates that pension funds will lose 4,000 billion USD in 2008 only (4). In the Netherlands (5) as well as in the United Kingdom (6), monitoring organizations recently blew the whistle asking for an emergency contribution reappraisal and a State intervention. In the United States, growing numbers of announcements call for contribution increases and benefit reductions (7), knowing that it is only in a few weeks time that most of these funds will start calculating their total losses (8). Most of them are still deluding themselves about their capacity to build up again their capital after the markets turn around. In March 2009, when pension fund managers, pensioners and governments will become simultaneously aware of the fact that the crisis is there to last, that it coincides with the « baby-boomer » generation’s age of retirement and that the markets will not resume their 2007 levels until many long years (9), chaos will flood this sector and governments will reach the moment when they will be compelled to nationalize all these funds. And Argentina, who took this decision a few months ago already, will appear a pioneer.
All the trends described above are already at work. Their combination and the public becoming aware of the consequences they could entail, will result in the great collective psychological trauma of Spring 2009, when everyone will realize that we are all trapped into a crisis worse than in the 1930s and that there is no possible way out in the short-term. The impact on the world’s collective mentalities of people and policy-makers will be decisive and modify significantly the course of the crisis in its next stage. Based on greater disillusion and fewer beliefs, social and political instability will settle down worldwide.
Finally, this GEAB N°30 presents a series of 13 questions & answers designed to enhance savers'/investors'/decision-makers' capacity to understand and anticipate the next stages of the global systemic crisis:
1. Is this crisis different from the previous crises which affected capitalism?
2. Is this crisis different from the 1930s crisis?
3. Is the crisis as serious in Europe or Asia as in the USA?
4. Are the current actions undertaken by public authorities worldwide sufficient to curb the crisis?
5. What are the major risks still weighting on the world financial system? And are all savings equal in front of the crisis?
6. Is the Eurozone a true protection shield against the worst aspects of the crisis and what should the Eurozone do to improve its protection status?
7. Is the Bretton Woods system (in its 1970s last version) currently collapsing? Should the Euro take the place of the Dollar?
8. What can be expected from the next G20 meeting in London?
9. Do you think that deflation is right now the biggest threat to economies worldwide?
10. Do you think that the Obama administration will be able to prevent the USA from sinking into what you called the ‘Very Great US Depression’?
11. In terms of currencies, beyond your anticipation of the Dollar resuming its collapse in the very next months, do you think that the UK Pound and the Swiss Franc are still currencies with an international status?
12. Do you think that the CDS market is about to implode in the coming months? And what could be the consequences of such a phenomenon?
13. Is there a ‘US Treasury Bonds Bubble” about to burst?
---------
Notes:
(1) It can be useful to read on this crisis a very interesting contribution by Robert Guttmann published in the 2nd half of 2008 on the website Revues.org, supported by the Maison des Sciences de l'Homme Paris-Nord.
(2) As a matter of fact, commodities have already started contributing to boost the market of international sea transport. Source: Financial Times, 12/14/2008
(3) It is in those countries that capital-based pension systems were most developed (see GEAB N°23) but is also the case of Ireland. Source: Independent, 11/30/2008
(4) Source: OECD, 11/12/2008
(5) Source: NU.NL, 12/15/2008
(6) Source: BBC, 12/09/2008
(7) Sources: WallStreetJournal, 11/17/2008; Phillyburbs, 11/25/2008; RockyMountainNews, 11/19/2008
(8) Source: CNBC, 12/05/2008
(9) Not to mention the effect of an explosion of the US T-Bond bubble on pension funds. See Q&A, GEAB N°30.
It now looks like the FED lowered the discount rate to effect a devaluation of the dollar after determining that weakness gripping oil prices made it safe to do so at this time. A weak dollar should make US products cheaper and more competitive abroad again. Exports then could be part of the stimulus plan. At the same time, while oil is cheap we do not have to be concerned that energy prices will eat up declining domestic business revenues and disposable personal income.
But even with the dollar's slide over the last few weeks it remains far above its recent low.
Of course the European’s can quickly counter by lowering their interest rates.
Where does that leave gold? Continued volatility is my guess. I would not be surprised to see $950 or $750.
CG
I liked the way you laid this out.
Construction materials (steel, aluminum, copper, etc.) stocks up through out 2009 in prep for 2010 inflation.
Oil and Gas, manipulated down to $35 a barrel and then headed back to $70 by end of 2009.
Housing, look for prices to remain stagnant to down for all of 2009. Nothing the Feds do will help any of this.
Even if they reduce interest rates below 4% no new buyers will buy for fear of the depreciating values.
PM's, I look for Gold to test $1,000 again next year and possibly go to $1200 in crisis. Silver will follow far behind and might see $20. Plat. Will remain dead as car companies need little of this metal.
State bankruptcies or bailouts, several states with CA on the top of the list will go bankrupt next year or will have to be bailed out by the Feds for the tune of billions more printed dollars.
Stocks, will remain in a volatile trading range from 7,000’s on the DOW to above 9,000.
It will be a great year to build a hard asset portfolio in senior miners, steels, cement, coal, oil, etc.
Inflation, basically dead for all of 2009 as more deflation sets in, but look out 2010.
Obama, billions and billions, perhaps trillions, of dollars worth of NEW NEW deal programs.
<< <i>Last summer when the dollar was in a deep rut Caterpillar and other manufacturers were actually starting to export products. Then came the credit crunch and a soaring dollar and the growth in exports ended.
It now looks like the FED lowered the discount rate to effect a devaluation of the dollar after determining that weakness gripping oil prices made it safe to do so at this time. A weak dollar should make US products cheaper and more competitive abroad again. Exports then could be part of the stimulus plan. At the same time, while oil is cheap we do not have to be concerned that energy prices will eat up declining domestic business revenues and disposable personal income.
But even with the dollar's slide over the last few weeks it remains far above its recent low.
Of course the European’s can quickly counter by lowering their interest rates.
Where does that leave gold? Continued volatility is my guess. I would not be surprised to see $950 or $750.
CG >>
Well done!
Thanks, GS, aka OP. Predicting the new year is always fun here. Predictions here have been suprisingly accurate, over the years. We need all the usual suspects to chime in and then we will have a better idea of the prognostication for '09.
with the "new" policy of the fed and treasury to "print money at all costs" (my term) won't that hurt the relative value of the dollar compared to the other currencies in the USD index?
deflate and reflate...it seems we have deflated rather quickly....i would expect a corresponding quick reflate with the monetary policies.
<< <i>
13. Is there a ‘US Treasury Bonds Bubble” about to burst?
>>
How appropriate this should be #13.
This is likely to be a (the) trigger and it is probably the result of central banks holding commoditys' prices back.
Leadership still appears to be weak, tentative, and misdirected.
About 45 minutes before I was to leave for my meeting with Commissioner Bart Chilton of the U.S. Commodity Futures Trading Commission, this news hit the tape:
"Obama to appoint Gary Gensler to lead Commodities Futures Trading Commission -- AP."
Gensler is a former undersecretary of the treasury and assistant secretary of the treasury.
Gensler is a Goldman Sachs alum and a Treasury man. Obama is putting one of the key figures in the Gold Cartel scheme into the top role at the CFTC. Talk about the fox guarding the henhouse! But the bad news might be good news.
My meeting with Chilton went on as scheduled and lasted about 50 minutes. The surprise was that three others from the CFTC staff attended, including the deputy general counsel. One of the other staffers had already viewed the video of GATA's Gold Rush 21 conference.
Chilton listened intently, took notes, as did one of the others, and asked many questions. I laid out GATA's presentation. I am not going to get into all the details, as we will see what takes place in the months to come. But I chuckled when telling them that if they really wanted to comprehend what the gold price suppression scheme is all about, all they have to do is go to their new chairman -- at the right time. No one knows what is going on better than he does.
I did not hold back. I said the main culprit of the Gold Cartel was our own government, which has been in league with bullion banks like JPMorganChase.
Naturally, I drew parallels to the Madoff scandal and how the Securities and Exchange Commission ignored nine years' worth of probable cause to suspect a Ponzi scheme. I also laid out how and why what is occurring in gold and silver could lead to a much bigger scandal if the price suppression scheme is not stopped -- and that is because the Gold Cartel is running out of the gold needed to meet the growing annual deficit between supply and demand.
I was very impressed with Chilton, and he said my trip to Washington would not be in vain.
There are two things for sure. First, as in the Madoff scandal, no one can say the powers that be didn't get the scoop, the facts about the gold price suppression scheme -- what has happened and why. And second, if there is one person in Washington who will try to get to the truth about gold, this is the man.
http://gata.org/node/7019
roadrunner
<< <i>Linky
GEAB N°30 is available! Global systemic crisis – New tipping-point in March 2009: 'When the world becomes aware that this crisis is worse than the 1930s crisis'
- Public announcement GEAB N°30 (December 16, 2008) -
LEAP/E2020 anticipates than the unfolding global systemic crisis will experience in March 2009 a new tipping point of similar magnitude to the September 2008 one. According to our team, at that period of the year, the general public will become aware of three major destabilizing processes at work in the global economy, i.e.:
• the length of the crisis
• the explosion of unemployment worldwide
• the risk of sudden collapse of all capital-based pension systems
Interesting read! It truly shows that this deep recession/depression is global and has the potential to be a nightmare....deeper than the 1930's version. The landscape will be full sharks preying on the unprepared. But then again, how can one truly prepare for such a world disaster.
Another catalyst that I didn't see in the artcle is a terriost event that shuts down America which gets the ball rolling....off the cliff.
My March 2009 Predictions
Ren
<< <i>cohodk....
with the "new" policy of the fed and treasury to "print money at all costs" (my term) won't that hurt the relative value of the dollar compared to the other currencies in the USD index?
deflate and reflate...it seems we have deflated rather quickly....i would expect a corresponding quick reflate with the monetary policies. >>
Possibly.
But as I see it, other countries will also have to print, print, print. Our efforts are already 1 year ahead of Europe which was still raising rates as late as this summer. European banks are still much more highly leveraged than in the USA. If you were to place a bet on which global region can emerge from a recession first, where would you place it?
But the bigger picture as I see it. We can print, print, print, all we want, but if there is no demand for the money does it really matter? I believe we and probably the world have reached peak economic demand. Through the fall of communism and the effort of China to be the factory to the world, 1 BILLION people have entered the economy in the past 20 years. The demands of those created an economic boom that we may never witness again.
The USA enjoyed tremendous growth from the late 1940's to present on the demands of the baby boomers. Think of the addition of China and the Eastern Bloc countries as a GIANT WORLDWIDE baby boom. Now, the demands of that group have been largely met. The difference now is that those demands are changing. Now the demand is not geared toward building the economy, but rather taking from it.
How do we build the economic engine...through demand, hence through demographics. Where are the demographics going to come from? USA, Europe, China? These 3 largest economies have stable to negative domestic population growth. Only the poorest regions of the world have positive population growth. That sounds more like a demand ON the economies, rather than a demand FOR the economies.
Regarding oil prices.......Bursting bubbles are usually completed after an 80-90% drop. So look for oil to bottom between $15 and $30. I do not believe it will get over $50.
I suppose while we are making predictions I may as well throw out a thought on the stock market. The pundits all say that this economic downturn is as severe as the 1972-1982 period. During that time the DOW traded for about 1x book value. I'll leave it to you to figure out the present book value of the DOW.
There may also be 200 million very unhappy Chinese if the global economic engine doesnt restart. I will also let you consider those repercussions.
Knowledge is the enemy of fear
Next 1-2 years: deflation
1-2 years later: high inflation
1-2 years after that: gov't intervention on inflation, i.e. high interest rates.
and after that: US is AOK.
I think he has the sequence right. I'm not sure the timeline. The timeline may be longer due to global nature of this deep doodoo.
He also predicted BHO's approval rating will be where GW is now.
And, the talk radio heads will be off the air.
Ren
<< <i>
Next 1-2 years: deflation
1-2 years later: high inflation
1-2 years after that: gov't intervention on inflation, i.e. high interest rates.
and after that: US is AOK >>
I think it will play out the same way (though the timeframe may be different)
very apparent that it would probably "never" be in the best interest
of the US and most of the developed world to go to the gold standard
except as, possibly, a temporary measure to get through a crisis.
But now I'm wondering if it might be within the interests of one of the
newer global players to do so. It's not impossible that such a currency
could become the new reserve currency.
Holding the price of gold and commodities down would seem to increase
the chances of this occuring since it suppresses the price and increases
the need.
This would be against the interests of this country and destabilizing in
the long term.
<< <i>Did anyone catch Dick Morris' prediction of the next 3-6 years?
Next 1-2 years: deflation
1-2 years later: high inflation
1-2 years after that: gov't intervention on inflation, i.e. high interest rates.
and after that: US is AOK.
I think he has the sequence right. I'm not sure the timeline. The timeline may be longer due to global nature of this deep doodoo.
He also predicted BHO's approval rating will be where GW is now.
And, the talk radio heads will be off the air.
Ren >>
Hes a quack, but lets say hes right.
Deflation---prices drop 50-75%.
Inflation---Prices rise 100-200%
Net result.... We are right back to where we are today. Why own anything? Thats why the flight to Treasuries.
Knowledge is the enemy of fear
<< <i>
Net result.... We are right back to where we are today. Why own anything? Thats why the flight to Treasuries. >>
You can't eat treasuries and you can't eat good intentions.
Everything's price is determined by psychology. Rushing into treasuries makes
sense so long as the prices of everything are imploding but eventually buyers
will ask themselves just what is backing the value of these. So long as the crops
are planted and people have money to buy the necessities which are mostly made
in China then treasuries are solid gold.
The real problem is that these debts are mostly founded on the ability of the gov-
ernment to tax. This ability will erode as the crisis deepens and the tax base shrinks.
Treasuries were too high before this mess started and spiking upward is not good
when seen in the light of exploding debt and shrinking production.
The die was cast even before Reagan and the FED artificially used interest rates to
curb inflation. The forces that are inflation have continued to build out of sight. Spend-
ing has grown out of control despite the massively improved productivity and the init-
ial improvements in efficiency caused by increased global trade.
These chickens are coming home to roost and the economy will continue the tailspin
until they are addressed and accounted for. It is impossible to maintain the staus
quo when it involves breaking the laws of nature. We can't consume more commodities
than are produced and we can't produce much with a third rate educational system.
We can't return to the way things were, but on the bright side, they never should have
been that way.
The government should be leading by example. They should be cutting spending and
investing in infrastructure. This should be not only rebuilding of failing systems but
new systems such as intercity rapid transit. We need to focus on the future and cut
our losses with the past.
If this recession is deep then our problem might be worst when the rest of the world
recovers and we're still living in the 1960's.
ernment to tax. This ability will erode as the crisis deepens and the tax base shrinks."
Astute observation.
<< <i>"The real problem is that these debts are mostly founded on the ability of the gov-
ernment to tax. This ability will erode as the crisis deepens and the tax base shrinks."
Astute observation. >>
Very true.
Difference is one region taxes its citizens at 30% while the other at 60%. Unless Europe begins to tax the taxes, they dont stand a chance.
Knowledge is the enemy of fear
WOW that was quick, oil down to $33.87 yesterday maybe I should change this to $25.00?
It's amazing how we all are using 75% less energy than just a few months ago?
Gee a worldwide crises gone just like that.
Wow, $33. I'm ready for an oil bailout!
i was thinking as a filled my tank yesterday....what is the cost of a barrel of oil from out of the wellhead, transport, refinery, delivery to the station and station costs? it must be well over $30.
Beverly Hillbillies opening from you-tube
cohodk..thanks for a reply, understand it, we'll see
mhammerman...good projections, where in 'Vegas can i play that senario?
<< <i>"Oil and Gas, manipulated down to $35 a barrel and then headed back to $70 by end of 2009."
WOW that was quick, oil down to $33.87 yesterday maybe I should change this to $25.00?
It's amazing how we all are using 75% less energy than just a few months ago?
Gee a worldwide crises gone just like that. >>
GS, you are thinking linear. Just like oil consumption did not increase 1000% from 1998 to 2008, it did not decrease 75%. Prices do not move in a linear fashion to demand. Oil will probably bottom in the mid 20s. this will still represent more than a doubling over 10 years, or a 6-8% annual increase. That is more in line with the inflation rate.
You and I will never see $150 oil again. Any dramatic increases from here on out will be met with rapid demand destruction and increasingly efficient energy usage.
Knowledge is the enemy of fear
Hey, you don't have to gamble, play things that are likely to do you some good.
Well, for example, you can play distressed stocks with your tdameritrade and buy majors (I'm thinking Marathon because it's cheap). I'm thinking you can get good production based companies that have actual assets that make something you can use and you can get these stocks at 20%30% of their 52 week highs. Get a pocket full of $1 stocks for a few hundred dollars and just sit on them and work them into a postion in some majors.
You can play metal with your own wherewithall. Be sure that your receipt notes cash and you should get cash getting out also if you trade with the same guy...cash in-cash out, what happens at the coin shop stays at the coin shop. US Eagles are best but they have a premium, that's why they are the best. If push comes to shove, a fractional gold eagle or handfull of silver eagles will be quite liquid and at a premium. Best to do this kind of business face to face and not with the internet because you can build an easy relationship and develop a little routine with somebody. Just call someone up and ask what they are getting for a ase and then ask them what they are getting for something else and you will see that the premium is on the ase coming and getting out as well. Foreign stuff is just that...foreign.
You can be aware of the tax situation; with decreasing revenues, they are going to tax those that they can with more user taxes so try and get it back on the other side by taking pretax deductions for medical and transportation and be sure to donate to 501 C-3 non-profits to lower your taxes even more and that way, you can support those things that you think are worthy of your buks...don't be a tax magnet, get out of the way and you won't have to participate in this madness. If you're thinking of buying a car, now is a good time but don't pay more than 4% for the note and drag it out for 3 or 4 years, it's cheap money same with a house. Your existing house, refi to 5% and slip it into a 15 yr note for the same monthly money as a 30 at 6.5...more upfront interest = more tax deduction...it's all good.
Oh, yeah I forgot to mention a little tidbit I came across during my work...No one is buying municipal bonds or public construction bonds, anywhere. The money to lend on bonds is simply not there so don't look for any big public projects at the municipal/county level 'cause it is not there right now. No one is going to loan precious cash on bond funded construction projects so just keep your hands in your pocket on this stuff.
For me, no bonds except for inflation linked bonds, no municipal bonds, no fed paper of any kind, no paper except for the stock plays listed above. Here's the tale of the tape for the YTD for my fund that I participate in. This fund has a number of self directed management options and I chose inflation linked bonds in January, after digesting the prognostications on our thread:
stock account (mirrors DOW) -40.97%
global equities -43.61%
growth -40.73%
equity index -38.75%
social choice -24.35%
INFLATION LINKED BOND -0.12%
realestate -10.84%
So, I came out of it very good as my only goal was to NOT LOSE MONEY. I was suprised that the social choice worked out at only -24...those bleeding liberals usually run as soon as things get wonkey but they hung in there.
Oh well...be good and keep your green on your your side of the line. Good luck in '09 but I'm thinking it is sure starting out to be a lackluster year. Getting in position for '10/'12 is my thinking.
<< <i>
<< <i>
13. Is there a ‘US Treasury Bonds Bubble” about to burst?
>>
How appropriate this should be #13.
This is likely to be a (the) trigger and it is probably the result of central banks holding commoditys' prices back.
Leadership still appears to be weak, tentative, and misdirected. >>
Let me see, people are scrambling to "invest" in something that pays them no interest and is succeptable to loss of purchasing power through massive amounts of monoploy money being cranked out on a daily basis. Sures sounds like the Lemmings have found a new place to "invest" their money.
“there have been tales of tankers filled and sitting”
Well how about completely filling the SPR while they are desperate to move this stuff?
Lets offer $25 per barrel for a large bulk purchase and use the TARP money to pay!
“You and I will never see $150 oil again.”
Dave my friend, you and I will have to part ways on this idea. I think we will see $150 within 24 months.
I think we are going to see some form of hyperinflation, the dollar will drop like a stone, and our cost will go right back up. We shall see.
<< <i>I disagree on the hyperinflation and the dollar dropping. This is not just a US problem and Europe has similar issues. If we both face the same problems and use somewhat similar fixes, then the dollar will hold its value against the euro and pound, among others. I do not see a country where the currency will be so strong as to cause hyperinflation with respect to either the dollar or the euro. It is all about relative value. Since the meltdown and bailouts here the dollar has strengthened against the euro and pound, recently giving back some to the euro, but still 15% (+/-) ahead of where it was earlier in the year. >>
In my opinion, the strengthening of the US dollar is just a temporary bounce, due to everyone deleveraging their assets and running into supposed 'strong' US dollars.
Considering Fundamentals alone, the US dollar is headed drastically lower.
In fact, I believe the US Fed is purposely intending this to happen as this is the only way the US can get out of their debt obligations.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
What major modern world city could be in this much trouble?
Read the clues and then scroll down:
Prisoners in jail don't want to be released; some who do get out promptly re-offend to head back where there's heat, medical care and feed every day. We see guys make a conscious decision they'll be better off in prison than in the community, homeless and hungry,"
There is no hurricane or other natural disaster to blame for problems here.
The jobless rate has climbed past 21 percent, the embattled schools just fired the superintendent, tens of thousands of homes and stores are derelict and abandoned.
Just one charity food program serves 41,000 people a month.
This cities population has gone from a peak of 1.8 million in the 1950s to half that now.
One apartment complex, for the elderly, is being built barely a block from two grade schools recently abandoned by the city, and now sitting empty and ransacked.
Then there's the vast area of decaying neighborhoods, with weedy, trash-strewn lots and vacant, burned-out houses. Hundreds of urban vegetable gardens citywide that have taken root on land cleared after the razing of abandoned homes.
The city's deficit is approaching 300 million U.S. dollars, the schools face a deficit of more than $400 million. Several dozen schools have been closed in the past three years.
Trying to combat its blight, this city has applied for $47 million from its central government for neighborhood stabilization money, with half earmarked to tear down more than 2,300 vacant homes.
About 44,000 of the 67,000 homes that have gone into foreclosure since 2005 remain empty.
Overall, the residential market is catastrophic, with the average price of a home in the city at $18,513.
DETROIT
I believe there are some conspiracies involved in crashing the price of oil just as gold was at the same time. Just follow it to those who would benefit. The whole commodity complex was targeted to bolster the USD and make the profiteers billions by shorting. The hedge funds never had a chance.
Goldsaint, I agree. We will see $150 oil, $1033 gold, $21 silver, and many other cyclical high commodities prices in the near future. I would not be surprised to see $200+ oil on the next stronger 1/2 cycle of the commodities boom.
roadrunner
the big "D" word when it comes to the USD (devaluation that is) -
and get to pay back all those loans with cheaper dollars, most dont have savings anyway, so dollar denominated savings losses will be offset with far greater gains in paying down your debt....
and the flow of capital will start,
and regulation will prohibit any more bad borrowers from getting loans.....
Contrast this with inflation, where dollars become worth less in the US so that you would be paying off your debts more cheaply. If we had hyperinflation per Zimbabwe, you might be able to pay off your mortgage for the price of a postage stamp.
What devaluation of the dollar does do that can be helpful is to make US manufactured and agricultural products cheaper abroad, which would stimulated export sales and help the US economy. Offsetting this would be that essential products that we import like oil would be more expensive.
Also foreign investors might perceive US companies as being cheap and therefore good acquisition targets.
CG
GOLD NEWS
ASSET OF LAST RESORT
Swiss gold bullion in huge demand as trust in banks dives
Swiss gold refiners are having great difficulty in keeping up with demand for gold bullion leading to long delivery times as investors wary of other stores of wealth.
Author: Arnd Wiegmann and Lisa Jucca
Posted: Wednesday , 17 Dec 2008
MENDRISIO/ZURICH, Switzerland (Reuters) -
Sealed off by grey concrete walls and barbed wire, the workmen in protective glasses and steel-toed boots at this smelter cannot work fast enough to meet demand from the nervous rich for gold.
This refinery near Lake Lugano in the Alps is running day and night as people worried about recession rush to switch their assets into something that may hold its value.
"I have been in the gold business for 30 years and I have never experienced anything like this," said Bernhard Schnellmann, director for precious metal services at the refiner Argor-Heraeus, one of the world's three largest.
"Production has dramatically increased since the middle of the year. We cannot cope with demand," said Schnellman, wearing a gold watch on his wrist.
Spot gold hit a record $1,030.80 an ounce on March 17. It fell below $700 in late October, partly because investors sold their holdings to cover losses in equity and bond markets hit by the credit crisis, and is now around $830 an ounce.
The trigger for the price to rise again could come from a much weaker dollar, making gold cheaper for holders of other currencies, and a renewed aversion to paper assets as governments and central banks pump large amounts of cash into the economy, stoking inflation.
Smoke billows as the molten gold, like glowing butter, is poured. To cool it, the worker drops it into water. It hisses as it hits. Once hardened in moulds, the gold bars are embossed with the refinery's seal. Workers wearing white gloves stack them into boxes like domino pieces.
Though Switzerland is not a gold miner, it is home to some of the world's largest refineries, which process an estimated 40 percent of all newly mined gold.
Argor-Heraeus is part-owned by the Austrian Mint and a subsidiary of Germany's Commerzbank. Commercial and central banks are its chief customers and it says it processes some 350-400 tonnes of gold and 350 tonnes of silver per year.
Customers buying gold bars, which can weigh more than 10 kg each, have to wait roughly a month, taking into account the year-end holiday season.
For those buying coins or ingots, which can fit into the palm of a hand, the delay is six to eight weeks. A year ago, these small products could be had within a couple of days.
Worries about the banking system globally have boosted worldwide demand for physical gold, the Gold Council said.
"Many (people) are afraid of leaving their money in banks," said Sandra Conway, managing director at ATS Bullion in London, which sells bullion and gold coins to institutions and the retail market.
"It's difficult to quantify, but I would say our turnover over the last three months has certainly doubled compared to the previous three months," she said.
FULL CAPACITY
Other Swiss gold refiners also say business is booming.
"Since the summer we have experienced a sharp rise in demand for certain gold products. The one-kilo bar has become very popular," said Fiorenzo Arbini, in charge of health and safety at Pamp, another large Swiss refiner.
"People used to buy certificates, now they want physical gold."
Schnellmann said the Argor-Heraeus smelter is operating at full capacity, three eight-hour shifts a day. Conquering the backlog by hiring is difficult, because each candidate has to undergo a security check.
Gold refiners were established in Switzerland to supply the watch industry and, later, jewellery-makers in Italy.
Switzerland's largest banks stepped in to replace a void in gold trading while the London gold market was shut after World War Two and again during a brief closure in 1968.
The former Soviet Union, another top gold producer, chose Zurich banks to handle most of its gold sales in the 1970s and 1980s.
"Gold has an image of being the asset of last resort. This could be viewed as old-fashioned but this is how enough people with enough money to matter think," said Stephen Briggs, a metals strategist at RBS Global Banking & Markets.
GOLD TOUCH
India, China and the Middle East remain the biggest gold importers, particularly for jewellery. But demand for physical gold has exploded also in Europe, the Gold Council said.
In Switzerland, home to the world's largest private banking industry, demand for gold bars and coins shot up six-fold to 21 tonnes in the third quarter of 2008, more than in any other European country.
Retail investment in gold rose 121 percent in the third quarter of 2008, an important contributor to the overall increase in global demand, the Gold Council said.
In that period purchases of gold bars by retail investors, who often buy through commercial banks, rose nearly 60 percent, notably in Switzerland, Germany, and the United States.
There was a surge of interest among professional investors shortly after the collapse of Lehman Brothers in September.
Private bank Julius Baer in October launched a fund to invest exclusively in gold bars stored in highly secured vaults in Switzerland.
"The fascination with gold has been there since the beginning of civilisation," said Schnellmann. "It cannot be explained: you can't eat gold, you cannot build anything resistant with it and yet people want to hoard it." (Additional reporting by Pratima Desai in London; Editing by Catherine Bosley and Sara Ledwith)