If You Like Gold Buy Silver Sean Rakhimov October 10, 2005 The world is running out of silver. Or is it? Let us qualify that: the world is running out of cheap silver. And how, you ask, we arrive at such conclusion? And I turn it right back at you, and say – show me the silver!
As we look around the world we find all but two dozen silver companies. That’s against a backdrop of hundreds of gold, oil, natural gas companies.
Why is gold in the news the last few weeks? Because gold price just made a 17-year high. It crossed the $470 mark recently. Where is that relative to the bottom? Not even a double. But gold, oil, uranium are highly political resources. That’s why the media tends to focus on them. What else is in the news? Natural gas. What about lead, zinc, copper, timber, iron-ore, nickel, etc? Are they not worthy of a discussion? Jim Rogers thinks they are. But I would like to zero in on another ignored metal – silver.
Silver is bulky, I hear. Hmm. Buffett didn’t think so. He didn’t buy gold, he bought silver. Why is it bulky for the average Joe? Because SILVER IS CHEAP!! Because you can still buy quite a bit of silver for your investment dollar. I will bet my rent money that at $50/oz silver won’t be bulky at all, and those who didn’t want to hear about it at $7 and $8 will be lining up to get some, because at $50 they will be carrying home a substantially lighter load.
Silver is not money, they tell me, it’s a commodity. Duh! Is that supposed to be bad for silver? Are we not in a commodities bull market? Oil is a commodity and you don’t see the oil price suffer from it.
You have to laugh at gold bugs that shun silver. They know all the reasons why gold will go up, but they can’t muster a couple for silver. “This time it’s different”, isn’t it? Is it different for silver? Which part is different? As of this writing gold/silver ratio stands at 62. I am betting that before this bull market is over you’ll see that number slashed at least in half. My message to gold bugs is - if you like gold, buy silver. >>
I have to agree and I've said so. Silver has been used as a hedge against inflation and falling currency since ancient times too. I’ve been buying silver all along it doesn’t take up more space than gold or platinum but it’s much more than an industrial metal IMO.
<< <i>When you say, "Buy silver" Are you buying silver stock or silver bars? >>
I'm buying 90% silver coins at scrape but bars are ok too for non collectors. I say take delivery there’s too many derivatives out there to take a chance. I do own some mining stock too but that’s only because I have a large 401k plan that I wanted to move some assets out of stock and not into cash.
<< <i>Jim Rogers and Jim Cramer are both dangerous to the ol' account balance. Egads! >>
I agree about Cramer. He ran his hedge fund into the ground in the late 90's. He had to beg CNBC for a job. He has held several roles of that station. He always ends up alone. Nobody wants to be associated with him.
Rogers, while eccentric, is very observant. He sees most things before others, thats why it takes a while for his pics to pan out. In the long run I would follow him before Buffett or especially Soros.
<< <i>Jim Rogers and Jim Cramer are both dangerous to the ol' account balance. Egads! >>
I agree about Cramer. He ran his hedge fund into the ground in the late 90's. He had to beg CNBC for a job. He has held several roles of that station. He always ends up alone. Nobody wants to be associated with him.
Rogers, while eccentric, is very observant. He sees most things before others, thats why it takes a while for his pics to pan out. In the long run I would follow him before Buffett or especially Soros. >>
How about Gates he seems to like gold, of course he has more than his fair share so he trying to preserve assets. It seems a lot of big players with deep pockets are in the market and I wouldn't want to bet against them. The Hunt brothers seem to drive up silver in the late 90's. I just have a feeling but I could be wrong but it won't last forever just like any other assest class it'd get over brought, sell when everyone else wants to buy this time around for my non-collector stuff.
Companies have not been in such shape since the Depression $88 billion in debt may become junk By CAROLINE SALAS Bloomberg News
More than $88 billion of U.S. corporate debt is teetering on the edge of investment grade and soon may join the record amount of bonds downgraded to junk this year. A surge in debt-financed takeovers and concern that higher oil prices will hurt profit growth is eviscerating credit quality in the $5 trillion market for corporate bonds, according to some strategists.
Not since the Depression of 1929 has corporate America received so many black eyes. General Motors, the world's largest automaker, Sears Holdings Corp., the biggest U.S. department store chain, and Eastman Kodak Co., the largest photography company, led 27 borrowers whose $499 billion of outstanding debt obligations suffered the ignominy of being downgraded to junk.
GM and Ford have a combined $320 billion in bonds. Overall, 618 companies are on the verge of having their ratings cut.
Companies with the highest junk ratings pay about 90 basis points, or 0.90 percentage point, more in yield than companies at the lowest end of investment grade. ( THAT’S RIGHT, KICK EM WHILE THEY ARE DOWN! THAT’S WHAT HAPPENS TO FOLKS SLOW PAYING THEIR CREDIT CARDS)
S&P last week put the debt of U.S. Treasury under review for a downgrade because of concerns of the billions of dollars worth they issue each day. ( just kidding folks, not yet?)
Companies have not been in such shape since the Depression $88 billion in debt may become junk By CAROLINE SALAS Bloomberg News
More than $88 billion of U.S. corporate debt is teetering on the edge of investment grade and soon may join the record amount of bonds downgraded to junk this year. A surge in debt-financed takeovers and concern that higher oil prices will hurt profit growth is eviscerating credit quality in the $5 trillion market for corporate bonds, according to some strategists.
Not since the Depression of 1929 has corporate America received so many black eyes. General Motors, the world's largest automaker, Sears Holdings Corp., the biggest U.S. department store chain, and Eastman Kodak Co., the largest photography company, led 27 borrowers whose $499 billion of outstanding debt obligations suffered the ignominy of being downgraded to junk.
GM and Ford have a combined $320 billion in bonds. Overall, 618 companies are on the verge of having their ratings cut.
Companies with the highest junk ratings pay about 90 basis points, or 0.90 percentage point, more in yield than companies at the lowest end of investment grade. ( THAT’S RIGHT, KICK EM WHILE THEY ARE DOWN! THAT’S WHAT HAPPENS TO FOLKS SLOW PAYING THEIR CREDIT CARDS)
S&P last week put the debt of U.S. Treasury under review for a downgrade because of concerns of the billions of dollars worth they issue each day. ( just kidding folks, not yet?) >>
That’s what concerns me in sitting in a money market fund thinking your safe. I was caught in the Enron scandal when my money market fund had corporate bonds. Most of these funds buy corporate bonds and if you have a lot of companies that can’t pay guess who takes the hit?
Money market are not guaranteed to hold a $1 nav. Although very few have failed to hold value, you might want to look into a tax-free money market. The tax equivilant yields are in some cases higher than a taxable money market and the underlying assets are usually insured.
Money market are not guaranteed to hold a $1 nav. Although very few have failed to hold value, you might want to look into a tax-free money market. The tax equivilant yields are in some cases higher than a taxable money market and the underlying assets are usually insured. >>
I should have said my Fidelity Short Term Investment fund,this is one of he few options many of us have in a 401k. I've taken my chances on BP stock since I know this company well. But still have quite a bit on the side lines at this point that needs to be redirected in the near future.
Well, the N.O. mayor did say about four weeks ago, that all the money was gone and they are bankrupt...fancy that, all the money disappeared in the confusion. Then they laid off 3000 city workers because of no money to pay them so, it would suggest that they probably won't be making any bond payments. Maybe someone else will pick up the tab?
The Unions finally give up and will go to work for the “Foreign Devils” Would it not be interesting if Toyota built a plant in Michigan, and then said NO UNIONS!
Toyota Considers a Factory on UAW's Front Step: Doron Levin Oct. 13 (Bloomberg) -- In its early days as a carmaker in the U.S., Toyota Motor Corp. avoided union-friendly states such as Michigan and Ohio, where its mere presence might spark boycotts or organizing. With the United Auto Workers and Canadian Auto Workers union now hobbled by job losses at General Motors Corp. and Ford Motor Co. -- and Toyota's popularity soaring among U.S. motorists --the Japanese automaker is weighing whether the moment might be right for an assembly plant in Michigan, the heart of the U.S. auto industry.
The same prediction couldn't have been made in the 1980s and 1990s, when the UAW was lobbying for trade restrictions against Japan's auto industry and promoting consumer boycotts. Some union locals staged events in which participants were invited to bash Japanese cars with sledge hammers.
Art Baker, chairman of a UAW union local in Lansing, Michigan, said government and the unions ``have an obligation to find ways to bring more jobs into this state.'' If GM isn't growing ``you have to find a way to continue to let other manufacturers grow. I'm just as comfortable representing Toyota in the UAW as I am GM or Chrysler.
Ok all you wizzened prognosticators and se'ers, lets go back to our roots and talk about metal...maybe take a moment around the campfire together.
The recent rush on gold seemed like a fool's rush to me, it pecked and pecked and pretty soon it was up $30, less than 10% of it's $440 domicile, not much of a rush. I do fully expect the next major gold move (not this little rush) to be a big violent tsunami. Like waking up one morning and reading that the Chinese have cornered 80% of the world mining stocks and now it's time to bend over because you aren't going to be able to afford it anymore.
Now gold is falling again and it makes me wonder...is there a big trigger out there? Is there something that we have to see before the world's wealth rushes to the safety of gold metal? I'm a buyer, quietly squirreling away small amounts, bit by bit, over time. It is a good time to buy on this pull-back so I may step up the pace a little but still, cost-averaging over time. During disaster...gold is primarily of no value, no one trades in gold on the street when there's no food or batteries or water...they want cash. If there is local anarchy...it will take cash and bullets, if the economy collapase...then maybe gold but you will probably have more pressing problems if it comes to that. Gold is not for trading on the streets, it is much more sophisticated, point being that without healthy markets and economies, the common man will not get much play for his yellow metal so here's to healthy economies!
Silver...oh, the hopes for $8 are all over the place. It must be a lonely fate, to believe that silver will explode/skyrocket/rock the world/and all the other things that people expect out of a $7.50 metal. Surely it must go up, someday. I guess the play with silver is that you can own a few hundred shares for not much buks so a movement of $1 means you make a few hundred dollars. With gold, you have a lot more cash concentrated in a small volume so movement is not so rewarding unless you own a few hundred shares and if your're talking about $450 a share, then a few hundred is $150,000 (300 sh) for a small cash gain and, that's a little heady for the regular guy so it is not really a speculative metal for the common man.
Some folks think gold bugs are speculators...but they aren't, at least not on the small time level of collectors and individual investors...it's just a very safe place to store wealth and maybe beat inflation and a weak dollar by holding international value instead of fluctuating local currency. Silver on the other hand is speculative...it just takes too much to really be a store of wealth but it is a nice way to speculate...a few hundred oz bars could turn a nice play...if it would only get over the $8 barrier, if it would only get over the $8 barrier Oh, The Joy!
When people realize inflation is real it will be the trigger. Very few individuals have assets for protection against inflation and gold should reap a large percentage of this psychological change.
Silver will get some but due to its relative (to price) scarcity moves could be magnified. In the long run silver will do best with a good economy so the optimist in me prefers it.
"WASHINGTON (Reuters) - U.S. consumer prices shot up an unexpectedly large 1.2 percent last month, the biggest gain in more than 25 years, as hurricanes Katrina and Rita led to the biggest energy-price surge on record, a government report showed on Friday.
But outside of food and energy, prices were tame -- rising a scant 0.1 percent for the fifth straight month, the Labor Department said, offering some hope a broad inflation increase could be averted.
A separate government report showed U.S. retail sales rose a lower-than-forecast 0.2 percent last month as car sales tumbled. Outside of autos, however, sales climbed a healthy 1.1 percent, partly reflecting a big gain in gasoline prices.
The increase in the consumer price index -- the largest since March 1980 -- outstripped Wall Street forecasts for a 0.9 percent gain, but the rise in the so-called core price index came in a touch below the 0.2 percent expected."
<< <i>When people realize inflation is real it will be the trigger. Very few individuals have assets for protection against inflation and gold should reap a large percentage of this psychological change.
Silver will get some but due to its relative (to price) scarcity moves could be magnified. In the long run silver will do best with a good economy so the optimist in me prefers it. >>
CNBC had a poll today that asked whether people thought the FED was overdoing the inflation outlook.
The result was that the majority of CNBC viewers thought the FED was being too AGGRESSIVE in its fight on inflation.
> A separate government report showed U.S. retail sales rose a lower-than-forecast 0.2 percent last month as car sales tumbled. > Outside of autos, however, sales climbed a healthy 1.1 percent, partly reflecting a big gain in gasoline prices.
LOL ! If gasoline can be added for Retail sales indicator, then food and energy must be added to Core Inflation
The Feds use funny figures indeed. They just pick and choose what makes sense. No wonder they get nervous when they see their cooked figures showing inflation risk.
MH It is certainly time we looked at this hard, thanks
“The result was that the majority of CNBC viewers thought the FED was being too AGGRESSIVE in its fight on inflation.”
CH
The problem with lying to the folks is that when you really need to move to protect yourself NOBODY believes you.
This is a very very strange market, and I for one believe it is very possible that my old Gold Dealer friend that said, “ one day you will wake up and there will be no Gold for sale, you won’t even be able to buy a Gold coin on Ebay” may very well be right. There are so many printed Dollars, Euro’s, Yuan’s, etc out there it would not take much these days to suck up all the Gold and the Silver also.
What we have here is an extreme exaggeration of all the capital markets. Yes, this market is looking a little like the mid 70’s, but there are several huge differences. Take just personal wealth for example, leaving out Hedge Funds and the likes. In the 70’s there were just a hand full of Billionaires in the U.S. that could even play with the big numbers now there are 400 plus just in the U.S.
In an article yesterday I read there are now 10 Billionaires in China and 70 more folks with net worth’s that exceed 750 million.
All this U.S. and Central bank manipulation that has been going on for 20 years can come to an end at any time, and if one Billionaire or another believes he is being screwed by inflation and starts buying Gold or Silver how many in the Billionaire club will follow. This is not even considering what might happen if China wanted a few percentage points of their holdings in Gold, or the petro dollars went into the metals.
Many moons ago here I made the comment that when the Gov. and the Press starts admitting the inflation problem the general public will begin to wake up, and that great MOB machine will start to roll.
Look at the other things we have been discussing here that are finally hitting the press,
“ wow these foreigners own a huge amount of our debt”
“wow we have no money in reserve, and with every disaster we have to print more debt and sell it to China”
“ wow these mortgage rates are going up”
“wow this stock market does not like this inflation and these continuing interest hikes”
Last night we went out to dinner with some friends and one of them owns a string of mattress stores in southern California. He mentioned that when he opened his mail Thursday--he got an immediate price hike of 10% and 28% more effective November 1st from his biggest supplier. The good news was that the Mattress manufacturer said it was only temporary. Ya right---just like $3 gas is temporary.
I am an economics illiterate, maybe worse. I sold the bulk of my collection and am heavy in cash. Am considering selling my house if it can be got ready in time. Have closed up shop, or nearly so on my real estate business due to concerns that the bulk of buyers here on the proverbial other side of the tracks are investors (haven't sold to an owner ocupant this year) who are most susceptible to interest rate hikes and a curtailment of gimmicky mortgages. I still have significant money (to me) in my collection.
I am terrified of buying PMs despite the bullish tone of this thread. My grandfather's warning of "gold is no better than a crapshoot" still reverberate. If things are really as bad as they appear, where does a chicken investor go? How can rare coins be considered a haven if there are half as many buyers a year (two, five) from now?
In recent speeches, Federal Reserve officials have continued to sound warnings on inflation. And the minutes from the central bank's Sept. 20 meeting, released Oct. 11, confirmed that rising prices remain the key worry for the majority of policymakers. The Fed and the markets will be carefully watching upcoming U.S. data releases for September for an energy-led upside jolt to key inflation gauges.
How will the energy spike play out in the month's data? We at Action Economics believe the clearest sign of the inflation consequences of this most recent spike in energy prices will be seen in the September consumer price index (CPI) report, scheduled for release Oct. 14.
ANCIENT HISTORY. We expect a solid gain of 0.8% in the overall index, with a 0.3% increase in the core index, which excludes food and energy prices. Action Economics expects a solid gain of 0.8% in the overall index, with a 0.3% increase in the core index, which excludes food and energy prices.
More notably, the year-over-year gains will likely show inflation soared 4.3% in the 12 months ended Sept. 30, from 3.6% in August, while the core year-over-year gain remains at 2.1%. The September headline rate will be the highest since July, 1991. Though some may take solace in this figure likely marking a near-term peak -- we expect a drop in this rate back to 3.7% in October -- it's clear that overall year-over-year CPI inflation is unlikely to drop below a 3%-4% rate anytime soon.
Indeed, headline inflation has consistently exceeded core inflation, according to the CPI report, since a brief reversal of fortune between October, 2001, and October, 2002, when the post-September 11 drop in energy prices worked their way through the domestic price measures.
<< <i>I am an economics illiterate, maybe worse. I sold the bulk of my collection and am heavy in cash. Am considering selling my house if it can be got ready in time. Have closed up shop, or nearly so on my real estate business due to concerns that the bulk of buyers here on the proverbial other side of the tracks are investors (haven't sold to an owner ocupant this year) who are most susceptible to interest rate hikes and a curtailment of gimmicky mortgages. I still have significant money (to me) in my collection.
I am terrified of buying PMs despite the bullish tone of this thread. My grandfather's warning of "gold is no better than a crapshoot" still reverberate. If things are really as bad as they appear, where does a chicken investor go? How can rare coins be considered a haven if there are half as many buyers a year (two, five) from now? >>
Actually everyone is probably an economic illiterate. Even economists rarely agree on anything except that the market will do whatever necessary to prove everyone wrong.
It's never a good time to panic and this is no different. There are merely a few long term trends which are likely to reverse over the next few years due to demographic and other changes. So long as you keep up with things you'll probably do fine with or without any specific assets in your portfolio. If you're afraid of metals then there are inflation adjusted bonds and other means of protecting a portion of your assets from changes in economic conditions. While cash may be king over the next few years there is every possibility that just sitting on cash will result in significant erosion to your wealth.
Use common sense and you'll probably do fine. Try not to follow the herd and while your grandfather's advice may be excellent most of the time it may not be currently. Gold does serve best for short term moves and these can work against you rather than for you.
Everybody is working with a different net so rules are tough to standardize but as I see it...if you increase the dry powder-you might take an inflation hit. If you shrink back to 15-20% cash, a few opportunities might be missed.
There are business failures on the horizon. There will be significant assets in play.
“Actually everyone is probably an economic illiterate.
Use common sense and you'll probably do fine.”
Slumlord98,
Cladking gives good advice here ,
This crazy Global economy we are in is just too difficult for nearly anyone to figure out, in addition local markets are all different.
Most of us “students of the economy” here, have agreed over the last year that a pretty safe plan is to keep your debt as low as possible and stay very diversified. Perhaps today being a little over waited on the Hard asset side would not hurt, and if your in some cash in C.D.’s keep them in short term renewals, say 90 days.
In defense of your Grandfather, if he knew what was going on today in the World economies he would be buying Gold.
Streeter, Thanks for your post, real life examples of what is going on in the lives of regular business people is very important.
Here is my story for the week, yesterday I got my ANNUAL letter from my health insurance company, who in most years raises my premiums 5% to 9% each year. This year the increase is nearly 20%, WOW!
It sounds like your present position is where you want to be. There is not substitute for cash. One saying is I have is "if I dont play I cant lose." Stick to what you know.
On an aside---- My son got a letter in the mail saying he was eligible for a $92,500 home equity loan. The funny thing is he is 3 yrs old. LOL. Are companies scraping the bottom looking for business?
Saint----My comment was directed to cladking when he wrote that most people dont realize inflation when they see it. The CNBC poll just illustrates that.
Don't forget that the CPI by design, has a relatively stable core of > 50%. This means that to get a 1% change out of it you need to get a 2% change out of the half that can be varied. 50% doesn't vary all that much, or only goes down in price. Other areas such as health care are under-represented as well. Toss it together and you have an index fairly resistant to change. Since food and energy do a lot of the changing, the BLS downplays it by ensuring that the "Core" rate is stuck out in plain view. Take away the major things that change, and fix the other 50% of the index, and you have something called "anti-core" inflation. What value is that to anyone except as a smoke screen.
Saint----My comment was directed to cladking when he wrote that most people dont realize inflation when they see it. The CNBC poll just illustrates that.
The illusion of inflation makes everyone feel richer, but are they really? Has your long time coin collection really increased in value over the last 20 years? In some cases the answer is yes, but in many the answer is NO.
“ Real” inflation numbers are slowly making their way into the established press yet the “real” numbers are yet to surface. As the media digs deeper into the real inflation numbers it is only a matter of time until those “real” numbers hit the public square in the face.
In today’s report, Bloomberg says that in the last 20 years inflation has doubled the price of everything. When they finally figure out that key elements have been dropped from the Governments reports they will be reporting that everything has in fact tripled.
So has the value of your long tem collection tripled in value? It should have, to keep you at least at break even.
If you use the real 300% number to calculate the value of your assets compared to 20 years ago things might look like this,
The Dow would be at 3,399 but adjusted for the manipulation of deleting bankrupt companies, mergers, and losers, and constantly replacing them with winners, it should be 1,699.
Gold would be at $155
Sliver would be at $2.47
A $100,000 C.D. would be worth $33,333.
This Is Price Stability? Check Back in 20 Years: Caroline Baum
Oct. 18 (Bloomberg) -- Given all the talk about price stability these last few years, I bet you'd be surprised to learn that the price level in the U.S. has doubled in a little more than 20 years.
I sure was. Perusing last week's report on the Consumer Price Index for September, I was struck by an entry at the very bottom of Table 1 that, I'm embarrassed to say, I'd never noticed before: ``Purchasing power of the consumer dollar (1982- 84=$1.00).'' I followed the dotted line across the page to the figure in the column for the September 2005 unadjusted index, which read $.503.
<< <i>How long can an economy last that doubles its prices every 20 years without going through a serious correction?
Too bad all the quarters from 1984 are not actually worth .50... >>
It will last as long as they can keep it hidden from the public what is truely happening. Just like now..... they keep refering to the 'core' inflation rate..... which is a rate that omits one of the biggest contributors to inflations...... which is fuel. So by their standards..... they report that inflation is low.... and wall street puts on a smile and bids up stocks. Been going on for quite some time.....
The problem is.... ask anyone on the street. The 'core' inflation rate is rather worthless to them. All they know is that they are feeling the hurt.... on gasoline, heating, cooling, food, education expenses..... you name it. These increases are very real, regardless what the feds say the 'core' rate is.
Too bad all the quarters from 1984 are not actually worth .50... >>
You should have demanded all your quarters to be silver and you'd be doing well. This isn't the time to make huge money in any of the markets you just want to preserve capitol and ride though the bad times ahead. This cycle will pass too, the bad will turn to good when it has to be addressed but it may take decades to reach current levels in some investments.
Article by Tim Iacono showing a calculation on what core and total inflation would be if the "equivalent rent" for housing and energy were put back into the CPI index. Note that the housing change was made in 1983 after the govt no longer wanted to see (nor pay out benefits based upon) high double digit inflation numbers. A short but interesting article.
One of the problems is that the stock market is somewhat insulated by the huge amounts of money invested in 401k accounts that is moved around in mutual fund percentages at the whims of the investment houses. If all the holders of 401k accounts pulled out of the stock accounts at the same time as the big time investors, we'd see a different market. All the 401k money you have should be shifted to guarateed return options until the current problems play out...that is unless you want to end up with 50% of your nest egg.
M3 has increased over 5X since 1980. One could come to the conclusion that at some point in time, we need to see a net 5X increase in many of the hard assets that last peaked in 1980. Even using gold's decline to $450 by 1981-1982 would lead one to a price of $2250/ounce adjusted for M3. The FED also has "hidden" ways to increase liquidity in the markets w/o immediately raising the spector of inflation. Eventually, they all come home to roost.
Since 1996 the increase in M3 has averaged about 10%/yr. The graph is steady and steep since 1996. The rate is still steady. This is what inflation is really about. And 10% per year is the reality of forming the asset bubbles we now have. Consumer prices have remained somewhat in check (except energy & food) due to cheap foreign imports. Those are also starting to advance in price. This pent up 10% per year is where we are really headed to regardless of the published BLS numbers of 3-4% inflation.
Pick any stable time period in the early 1980's when hard assets last crashed, and you should have a reasonable estimation of what they "should" be worth now....or will be worth. The fact that gold is essentially as the same price as 1981-1982 shows the con job that has been perpetrated on the American public wrt to "stable inflation" and the artificial depression of metal's prices.
All I know is that most of my expenses have gone up drastically over the last 7 years.
My health insurance has gone from $200 to over $1000 per month. Property tax's have doubled. Heat and electric has doubled. Cable and phone up Construction costs up Appliances College tuition Clothing Food real etstate....land/homes
The only thing you can buy cheaper today are airline tickets.
On the oil/gas issue....it will only be inflationary if prices remain high.
Ellwood, health insurance is significantly underestimated in the CPI. And that's good for the govt. Property taxes are not part of it either since your home is assumed to be a rental property. The CPI won't take off into orbit until home rental prices do. And unfortunately that won't occur until houses start languishing on the market and get rented out to cover the owner's costs. But this won't occur until the various bubbles have long burst. Geometric averaging was the final straw applied to the CPI since by design, it shaves off "rogue" peak periods and blends them into the longer term average. Problem is, we are in a rogue period now and the foreseeble future.
Ellewood, not sure exactly how that is done but "equivalent rent" prices went up about 2% last year. It's the main anchor of the BLS's CPI. Certainly your overall home ownership costs went up more than that. My property taxes went up 12% alone this past year as a fraction of my total mortgage payments....as did a large number of north east urbaners.
I suspect they survey rental prices of equivalent sized homes across the region. And those prices are fairly stable since the trend has been to buy a home at any cost rather than rent.
So gold drops 8 bucks today. To what do we owe this event??
Day to day, the movement can be opposite to what makes sense, and often does.
The Refco implosion should have been immediately gold positive as are all of the inflation #'s hitting the past week. Maybe the Refco derivative bust will show up in gold prices in a few weeks. Add another Cat. 5 hurricane coming to the list too.
The trend for gold is still up despite todays drop. Someday the dollar will regain confidence (and price vs gold), but not until government spending gets under control.
500 bay, the FED will need to get short term interest rates well into double digits to have any hopes of slowing down the inevitable results of their money supply boost over the past 9 years. All the while gold will be moving up. We just may get a correction here in gold down to the $435-$445 range before continuing up again.
Comments
<< <i>Does this make sense to you?
If You Like Gold Buy Silver
Sean Rakhimov
October 10, 2005
The world is running out of silver. Or is it? Let us qualify that: the world is running out of cheap silver. And how, you ask, we arrive at such conclusion? And I turn it right back at you, and say – show me the silver!
As we look around the world we find all but two dozen silver companies. That’s against a backdrop of hundreds of gold, oil, natural gas companies.
Why is gold in the news the last few weeks? Because gold price just made a 17-year high. It crossed the $470 mark recently. Where is that relative to the bottom? Not even a double. But gold, oil, uranium are highly political resources. That’s why the media tends to focus on them. What else is in the news? Natural gas. What about lead, zinc, copper, timber, iron-ore, nickel, etc? Are they not worthy of a discussion? Jim Rogers thinks they are. But I would like to zero in on another ignored metal – silver.
Silver is bulky, I hear. Hmm. Buffett didn’t think so. He didn’t buy gold, he bought silver. Why is it bulky for the average Joe? Because SILVER IS CHEAP!! Because you can still buy quite a bit of silver for your investment dollar. I will bet my rent money that at $50/oz silver won’t be bulky at all, and those who didn’t want to hear about it at $7 and $8 will be lining up to get some, because at $50 they will be carrying home a substantially lighter load.
Silver is not money, they tell me, it’s a commodity. Duh! Is that supposed to be bad for silver? Are we not in a commodities bull market? Oil is a commodity and you don’t see the oil price suffer from it.
You have to laugh at gold bugs that shun silver. They know all the reasons why gold will go up, but they can’t muster a couple for silver. “This time it’s different”, isn’t it? Is it different for silver? Which part is different? As of this writing gold/silver ratio stands at 62. I am betting that before this bull market is over you’ll see that number slashed at least in half. My message to gold bugs is - if you like gold, buy silver. >>
I have to agree and I've said so. Silver has been used as a hedge against inflation and falling currency since ancient times too. I’ve been buying silver all along it doesn’t take up more space than gold or platinum but it’s much more than an industrial metal IMO.
<< <i>When you say, "Buy silver" Are you buying silver stock or silver bars?
I'm buying 90% silver coins at scrape but bars are ok too for non collectors. I say take delivery there’s too many derivatives out there to take a chance. I do own some mining stock too but that’s only because I have a large 401k plan that I wanted to move some assets out of stock and not into cash.
Jim Rogers and Jim Cramer are both dangerous to the ol' account balance. Egads!
<< <i>Jim Rogers and Jim Cramer are both dangerous to the ol' account balance. Egads! >>
I agree about Cramer. He ran his hedge fund into the ground in the late 90's. He had to beg CNBC for a job. He has held several roles of that station. He always ends up alone. Nobody wants to be associated with him.
Rogers, while eccentric, is very observant. He sees most things before others, thats why it takes a while for his pics to pan out. In the long run I would follow him before Buffett or especially Soros.
Knowledge is the enemy of fear
<< <i>
<< <i>Jim Rogers and Jim Cramer are both dangerous to the ol' account balance. Egads! >>
I agree about Cramer. He ran his hedge fund into the ground in the late 90's. He had to beg CNBC for a job. He has held several roles of that station. He always ends up alone. Nobody wants to be associated with him.
Rogers, while eccentric, is very observant. He sees most things before others, thats why it takes a while for his pics to pan out. In the long run I would follow him before Buffett or especially Soros. >>
How about Gates he seems to like gold, of course he has more than his fair share so he trying to preserve assets. It seems a lot of big players with deep pockets are in the market and I wouldn't want to bet against them. The Hunt brothers seem to drive up silver in the late 90's. I just have a feeling but I could be wrong but it won't last forever just like any other assest class it'd get over brought, sell when everyone else wants to buy this time around for my non-collector stuff.
Oct. 9, 2005, 7:29PM
Companies have not been in such shape since the Depression
$88 billion in debt may become junk
By CAROLINE SALAS
Bloomberg News
More than $88 billion of U.S. corporate debt is teetering on the edge of investment grade and soon may join the record amount of bonds downgraded to junk this year.
A surge in debt-financed takeovers and concern that higher oil prices will hurt profit growth is eviscerating credit quality in the $5 trillion market for corporate bonds, according to some strategists.
Not since the Depression of 1929 has corporate America received so many black eyes. General Motors, the world's largest automaker, Sears Holdings Corp., the biggest U.S. department store chain, and Eastman Kodak Co., the largest photography company, led 27 borrowers whose $499 billion of outstanding debt obligations suffered the ignominy of being downgraded to junk.
GM and Ford have a combined $320 billion in bonds. Overall, 618 companies are on the verge of having their ratings cut.
Companies with the highest junk ratings pay about 90 basis points, or 0.90 percentage point, more in yield than companies at the lowest end of investment grade.
( THAT’S RIGHT, KICK EM WHILE THEY ARE DOWN! THAT’S WHAT HAPPENS TO FOLKS SLOW PAYING THEIR CREDIT CARDS)
S&P last week put the debt of U.S. Treasury under review for a downgrade because of concerns of the billions of dollars worth they issue each day.
( just kidding folks, not yet?)
<< <i>Oct. 9, 2005, 7:29PM
Companies have not been in such shape since the Depression
$88 billion in debt may become junk
By CAROLINE SALAS
Bloomberg News
More than $88 billion of U.S. corporate debt is teetering on the edge of investment grade and soon may join the record amount of bonds downgraded to junk this year.
A surge in debt-financed takeovers and concern that higher oil prices will hurt profit growth is eviscerating credit quality in the $5 trillion market for corporate bonds, according to some strategists.
Not since the Depression of 1929 has corporate America received so many black eyes. General Motors, the world's largest automaker, Sears Holdings Corp., the biggest U.S. department store chain, and Eastman Kodak Co., the largest photography company, led 27 borrowers whose $499 billion of outstanding debt obligations suffered the ignominy of being downgraded to junk.
GM and Ford have a combined $320 billion in bonds. Overall, 618 companies are on the verge of having their ratings cut.
Companies with the highest junk ratings pay about 90 basis points, or 0.90 percentage point, more in yield than companies at the lowest end of investment grade.
( THAT’S RIGHT, KICK EM WHILE THEY ARE DOWN! THAT’S WHAT HAPPENS TO FOLKS SLOW PAYING THEIR CREDIT CARDS)
S&P last week put the debt of U.S. Treasury under review for a downgrade because of concerns of the billions of dollars worth they issue each day.
( just kidding folks, not yet?) >>
That’s what concerns me in sitting in a money market fund thinking your safe. I was caught in the Enron scandal when my money market fund had corporate bonds. Most of these funds buy corporate bonds and if you have a lot of companies that can’t pay guess who takes the hit?
Money market are not guaranteed to hold a $1 nav. Although very few have failed to hold value, you might want to look into a tax-free money market. The tax equivilant yields are in some cases higher than a taxable money market and the underlying assets are usually insured.
Knowledge is the enemy of fear
<< <i>Ttown,
Money market are not guaranteed to hold a $1 nav. Although very few have failed to hold value, you might want to look into a tax-free money market. The tax equivilant yields are in some cases higher than a taxable money market and the underlying assets are usually insured. >>
I should have said my Fidelity Short Term Investment fund,this is one of he few options many of us have in a 401k. I've taken my chances on BP stock since I know this company well. But still have quite a bit on the side lines at this point that needs to be redirected in the near future.
Rick
Anybody ever hear if New Orleans, et. al., will default on their bonds?
The Unions finally give up and will go to work for the “Foreign Devils”
Would it not be interesting if Toyota built a plant in Michigan, and then said NO UNIONS!
Toyota Considers a Factory on UAW's Front Step: Doron Levin
Oct. 13 (Bloomberg) -- In its early days as a carmaker in the U.S., Toyota Motor Corp. avoided union-friendly states such as Michigan and Ohio, where its mere presence might spark boycotts or organizing.
With the United Auto Workers and Canadian Auto Workers union now hobbled by job losses at General Motors Corp. and Ford Motor Co. -- and Toyota's popularity soaring among U.S. motorists --the Japanese automaker is weighing whether the moment might be right for an assembly plant in Michigan, the heart of the U.S. auto industry.
The same prediction couldn't have been made in the 1980s and 1990s, when the UAW was lobbying for trade restrictions against Japan's auto industry and promoting consumer boycotts. Some union locals staged events in which participants were invited to bash Japanese cars with sledge hammers.
Art Baker, chairman of a UAW union local in Lansing, Michigan, said government and the unions ``have an obligation to find ways to bring more jobs into this state.'' If GM isn't growing ``you have to find a way to continue to let other manufacturers grow. I'm just as comfortable representing Toyota in the UAW as I am GM or Chrysler.
The recent rush on gold seemed like a fool's rush to me, it pecked and pecked and pretty soon it was up $30, less than 10% of it's $440 domicile, not much of a rush. I do fully expect the next major gold move (not this little rush) to be a big violent tsunami. Like waking up one morning and reading that the Chinese have cornered 80% of the world mining stocks and now it's time to bend over because you aren't going to be able to afford it anymore.
Now gold is falling again and it makes me wonder...is there a big trigger out there? Is there something that we have to see before the world's wealth rushes to the safety of gold metal? I'm a buyer, quietly squirreling away small amounts, bit by bit, over time. It is a good time to buy on this pull-back so I may step up the pace a little but still, cost-averaging over time. During disaster...gold is primarily of no value, no one trades in gold on the street when there's no food or batteries or water...they want cash. If there is local anarchy...it will take cash and bullets, if the economy collapase...then maybe gold but you will probably have more pressing problems if it comes to that. Gold is not for trading on the streets, it is much more sophisticated, point being that without healthy markets and economies, the common man will not get much play for his yellow metal so here's to healthy economies!
Silver...oh, the hopes for $8 are all over the place. It must be a lonely fate, to believe that silver will explode/skyrocket/rock the world/and all the other things that people expect out of a $7.50 metal. Surely it must go up, someday. I guess the play with silver is that you can own a few hundred shares for not much buks so a movement of $1 means you make a few hundred dollars. With gold, you have a lot more cash concentrated in a small volume so movement is not so rewarding unless you own a few hundred shares and if your're talking about $450 a share, then a few hundred is $150,000 (300 sh) for a small cash gain and, that's a little heady for the regular guy so it is not really a speculative metal for the common man.
Some folks think gold bugs are speculators...but they aren't, at least not on the small time level of collectors and individual investors...it's just a very safe place to store wealth and maybe beat inflation and a weak dollar by holding international value instead of fluctuating local currency. Silver on the other hand is speculative...it just takes too much to really be a store of wealth but it is a nice way to speculate...a few hundred oz bars could turn a nice play...if it would only get over the $8 barrier, if it would only get over the $8 barrier Oh, The Joy!
JMHO...care to add to the conversation?
assets for protection against inflation and gold should reap a large percentage of this
psychological change.
Silver will get some but due to its relative (to price) scarcity moves could be magnified.
In the long run silver will do best with a good economy so the optimist in me prefers it.
"WASHINGTON (Reuters) - U.S. consumer prices shot up an unexpectedly large 1.2 percent last month, the biggest gain in more than 25 years, as hurricanes Katrina and Rita led to the biggest energy-price surge on record, a government report showed on Friday.
But outside of food and energy, prices were tame -- rising a scant 0.1 percent for the fifth straight month, the Labor Department said, offering some hope a broad inflation increase could be averted.
A separate government report showed U.S. retail sales rose a lower-than-forecast 0.2 percent last month as car sales tumbled. Outside of autos, however, sales climbed a healthy 1.1 percent, partly reflecting a big gain in gasoline prices.
The increase in the consumer price index -- the largest since March 1980 -- outstripped Wall Street forecasts for a 0.9 percent gain, but the rise in the so-called core price index came in a touch below the 0.2 percent expected."
<< <i>When people realize inflation is real it will be the trigger. Very few individuals have
assets for protection against inflation and gold should reap a large percentage of this
psychological change.
Silver will get some but due to its relative (to price) scarcity moves could be magnified.
In the long run silver will do best with a good economy so the optimist in me prefers it. >>
CNBC had a poll today that asked whether people thought the FED was overdoing the inflation outlook.
The result was that the majority of CNBC viewers thought the FED was being too AGGRESSIVE in its fight on inflation.
Knowledge is the enemy of fear
> A separate government report showed U.S. retail sales rose a lower-than-forecast 0.2 percent last month as car sales tumbled.
> Outside of autos, however, sales climbed a healthy 1.1 percent, partly reflecting a big gain in gasoline prices.
LOL ! If gasoline can be added for Retail sales indicator, then food and energy must be added to Core Inflation
The Feds use funny figures indeed. They just pick and choose what makes sense. No wonder they get nervous when they see their cooked figures showing inflation risk.
S. America Goes Nationalist With Oil, Gas
It is certainly time we looked at this hard, thanks
“The result was that the majority of CNBC viewers thought the FED was being too AGGRESSIVE in its fight on inflation.”
CH
The problem with lying to the folks is that when you really need to move to protect yourself NOBODY believes you.
This is a very very strange market, and I for one believe it is very possible that my old Gold Dealer friend that said, “ one day you will wake up and there will be no Gold for sale, you won’t even be able to buy a Gold coin on Ebay” may very well be right. There are so many printed Dollars, Euro’s, Yuan’s, etc out there it would not take much these days to suck up all the Gold and the Silver also.
What we have here is an extreme exaggeration of all the capital markets. Yes, this market is looking a little like the mid 70’s, but there are several huge differences. Take just personal wealth for example, leaving out Hedge Funds and the likes. In the 70’s there were just a hand full of Billionaires in the U.S. that could even play with the big numbers now there are 400 plus just in the U.S.
In an article yesterday I read there are now 10 Billionaires in China and 70 more folks with net worth’s that exceed 750 million.
All this U.S. and Central bank manipulation that has been going on for 20 years can come to an end at any time, and if one Billionaire or another believes he is being screwed by inflation and starts buying Gold or Silver how many in the Billionaire club will follow.
This is not even considering what might happen if China wanted a few percentage points of their holdings in Gold, or the petro dollars went into the metals.
Many moons ago here I made the comment that when the Gov. and the Press starts admitting the inflation problem the general public will begin to wake up, and that great MOB machine will start to roll.
Look at the other things we have been discussing here that are finally hitting the press,
“ wow these foreigners own a huge amount of our debt”
“wow we have no money in reserve, and with every disaster we have to print more debt and sell it to China”
“ wow these mortgage rates are going up”
“wow this stock market does not like this inflation and these continuing interest hikes”
No sh—t Sherlock
I am terrified of buying PMs despite the bullish tone of this thread. My grandfather's warning of "gold is no better than a crapshoot" still reverberate. If things are really as bad as they appear, where does a chicken investor go? How can rare coins be considered a haven if there are half as many buyers a year (two, five) from now?
In recent speeches, Federal Reserve officials have continued to sound warnings on inflation. And the minutes from the central bank's Sept. 20 meeting, released Oct. 11, confirmed that rising prices remain the key worry for the majority of policymakers. The Fed and the markets will be carefully watching upcoming U.S. data releases for September for an energy-led upside jolt to key inflation gauges.
How will the energy spike play out in the month's data? We at Action Economics believe the clearest sign of the inflation consequences of this most recent spike in energy prices will be seen in the September consumer price index (CPI) report, scheduled for release Oct. 14.
ANCIENT HISTORY. We expect a solid gain of 0.8% in the overall index, with a 0.3% increase in the core index, which excludes food and energy prices. Action Economics expects a solid gain of 0.8% in the overall index, with a 0.3% increase in the core index, which excludes food and energy prices.
More notably, the year-over-year gains will likely show inflation soared 4.3% in the 12 months ended Sept. 30, from 3.6% in August, while the core year-over-year gain remains at 2.1%. The September headline rate will be the highest since July, 1991. Though some may take solace in this figure likely marking a near-term peak -- we expect a drop in this rate back to 3.7% in October -- it's clear that overall year-over-year CPI inflation is unlikely to drop below a 3%-4% rate anytime soon.
Indeed, headline inflation has consistently exceeded core inflation, according to the CPI report, since a brief reversal of fortune between October, 2001, and October, 2002, when the post-September 11 drop in energy prices worked their way through the domestic price measures.
Interest Rates have a ways to go
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>I am an economics illiterate, maybe worse. I sold the bulk of my collection and am heavy in cash. Am considering selling my house if it can be got ready in time. Have closed up shop, or nearly so on my real estate business due to concerns that the bulk of buyers here on the proverbial other side of the tracks are investors (haven't sold to an owner ocupant this year) who are most susceptible to interest rate hikes and a curtailment of gimmicky mortgages. I still have significant money (to me) in my collection.
I am terrified of buying PMs despite the bullish tone of this thread. My grandfather's warning of "gold is no better than a crapshoot" still reverberate. If things are really as bad as they appear, where does a chicken investor go? How can rare coins be considered a haven if there are half as many buyers a year (two, five) from now? >>
Actually everyone is probably an economic illiterate. Even economists rarely agree on anything
except that the market will do whatever necessary to prove everyone wrong.
It's never a good time to panic and this is no different. There are merely a few long term trends
which are likely to reverse over the next few years due to demographic and other changes. So
long as you keep up with things you'll probably do fine with or without any specific assets in your
portfolio. If you're afraid of metals then there are inflation adjusted bonds and other means of
protecting a portion of your assets from changes in economic conditions. While cash may be king
over the next few years there is every possibility that just sitting on cash will result in significant
erosion to your wealth.
Use common sense and you'll probably do fine. Try not to follow the herd and while your grandfather's
advice may be excellent most of the time it may not be currently. Gold does serve best for short term
moves and these can work against you rather than for you.
There are business failures on the horizon. There will be significant assets in play.
Excellent observation streeter! Maybe there will be some nice properties available for cheap.
“Actually everyone is probably an economic illiterate.
Use common sense and you'll probably do fine.”
Slumlord98,
Cladking gives good advice here ,
This crazy Global economy we are in is just too difficult for nearly anyone to figure out, in addition local markets are all different.
Most of us “students of the economy” here, have agreed over the last year that a pretty safe plan is to keep your debt as low as possible and stay very diversified. Perhaps today being a little over waited on the Hard asset side would not hurt, and if your in some cash in C.D.’s keep them in short term renewals, say 90 days.
In defense of your Grandfather, if he knew what was going on today in the World economies he would be buying Gold.
Streeter,
Thanks for your post, real life examples of what is going on in the lives of regular business people is very important.
Here is my story for the week, yesterday I got my ANNUAL letter from my health insurance company, who in most years raises my premiums 5% to 9% each year. This year the increase is nearly 20%, WOW!
It sounds like your present position is where you want to be. There is not substitute for cash. One saying is I have is "if I dont play I cant lose." Stick to what you know.
On an aside---- My son got a letter in the mail saying he was eligible for a $92,500 home equity loan. The funny thing is he is 3 yrs old. LOL. Are companies scraping the bottom looking for business?
Saint----My comment was directed to cladking when he wrote that most people dont realize inflation when they see it. The CNBC poll just illustrates that.
Knowledge is the enemy of fear
Don't forget that the CPI by design, has a relatively stable core of > 50%. This means that to get a 1% change out of it you need to get
a 2% change out of the half that can be varied. 50% doesn't vary all that much, or only goes down in price.
Other areas such as health care are under-represented as well. Toss it together and you have an index fairly resistant to
change. Since food and energy do a lot of the changing, the BLS downplays it by ensuring that the "Core" rate is stuck out
in plain view. Take away the major things that change, and fix the other 50% of the index, and you have something called
"anti-core" inflation. What value is that to anyone except as a smoke screen.
imputed rents of primary residences: 40%
durable goods + computers + clothing, etc - 10+%
roadrunner
Thanks CH
“ Real” inflation numbers are slowly making their way into the established press yet the “real” numbers are yet to surface. As the media digs deeper into the real inflation numbers it is only a matter of time until those “real” numbers hit the public square in the face.
In today’s report, Bloomberg says that in the last 20 years inflation has doubled the price of everything. When they finally figure out that key elements have been dropped from the Governments reports they will be reporting that everything has in fact tripled.
So has the value of your long tem collection tripled in value? It should have, to keep you at least at break even.
If you use the real 300% number to calculate the value of your assets compared to 20 years ago things might look like this,
The Dow would be at 3,399 but adjusted for the manipulation of deleting bankrupt companies, mergers, and losers, and constantly replacing them with winners, it should be 1,699.
Gold would be at $155
Sliver would be at $2.47
A $100,000 C.D. would be worth $33,333.
This Is Price Stability? Check Back in 20 Years: Caroline Baum
Oct. 18 (Bloomberg) -- Given all the talk about price stability these last few years, I bet you'd be surprised to learn that the price level in the U.S. has doubled in a little more than 20 years.
I sure was. Perusing last week's report on the Consumer Price Index for September, I was struck by an entry at the very bottom of Table 1 that, I'm embarrassed to say, I'd never noticed before: ``Purchasing power of the consumer dollar (1982- 84=$1.00).''
I followed the dotted line across the page to the figure in the column for the September 2005 unadjusted index, which read $.503.
Too bad all the quarters from 1984 are not actually worth .50...
Random Collector
www.marksmedals.com
<< <i>How long can an economy last that doubles its prices every 20 years without going through a serious correction?
Too bad all the quarters from 1984 are not actually worth .50... >>
It will last as long as they can keep it hidden from the public what is truely happening. Just like now..... they keep refering to the 'core' inflation rate..... which is a rate that omits one of the biggest contributors to inflations...... which is fuel. So by their standards..... they report that inflation is low.... and wall street puts on a smile and bids up stocks. Been going on for quite some time.....
The problem is.... ask anyone on the street. The 'core' inflation rate is rather worthless to them. All they know is that they are feeling the hurt.... on gasoline, heating, cooling, food, education expenses..... you name it. These increases are very real, regardless what the feds say the 'core' rate is.
<< <i>
Too bad all the quarters from 1984 are not actually worth .50... >>
I'd be very unhappy if all my 1984 quarters were worth only $.50
You should have demanded all your quarters to be silver and you'd be doing well. This isn't the time to make huge money in any of the markets you just want to preserve capitol and ride though the bad times ahead. This cycle will pass too, the bad will turn to good when it has to be addressed but it may take decades to reach current levels in some investments.
A short but interesting article.
5.3% Core inflation
7.3% Total inflation
CPI and inflation numbers
roadrunner
M3 has increased over 5X since 1980. One could come to the conclusion that at some point in time, we need to see a net 5X increase in many of the hard assets that last peaked in 1980.
Even using gold's decline to $450 by 1981-1982 would lead one to
a price of $2250/ounce adjusted for M3. The FED also has "hidden" ways to increase liquidity in the markets w/o immediately raising the spector of inflation. Eventually, they all come home to roost.
Since 1996 the increase in M3 has averaged about 10%/yr. The graph is steady and steep since 1996. The rate is still steady.
This is what inflation is really about. And 10% per year is the reality of forming the asset bubbles we now have. Consumer prices have remained somewhat in check (except energy & food) due to cheap foreign imports. Those are also starting to advance in price.
This pent up 10% per year is where we are really headed to regardless of the published BLS numbers of 3-4% inflation.
Pick any stable time period in the early 1980's when hard assets last crashed, and you should have a reasonable estimation of what they "should" be worth now....or will be worth. The fact that gold is essentially as the same price as 1981-1982 shows the con job that has been perpetrated on the American public wrt to "stable inflation"
and the artificial depression of metal's prices.
roadrunner
All I know is that most of my expenses have gone up drastically over the last 7 years.
My health insurance has gone from $200 to over $1000 per month.
Property tax's have doubled.
Heat and electric has doubled.
Cable and phone up
Construction costs up
Appliances
College tuition
Clothing
Food
real etstate....land/homes
The only thing you can buy cheaper today are airline tickets.
On the oil/gas issue....it will only be inflationary if prices remain high.
And that's good for the govt. Property taxes are not part of it either since your home is assumed to be a rental property. The CPI won't take off into orbit until home rental prices do. And unfortunately that won't occur until houses start languishing on the market and get rented out to cover the owner's costs. But this won't occur until the various bubbles have long burst. Geometric averaging was the final straw applied to the CPI since by design, it shaves off "rogue" peak periods and blends them into the longer term average. Problem is, we are in a rogue period now and the foreseeble future.
roadrunner
<< <i>Property taxes are not part of it either since your home is assumed to be a rental property. >>
RR...How do they determine rental payments on a home that's owned?
When I upgraded to a larger home my rent/mort. quadrupled.
I suspect they survey rental prices of equivalent sized homes across the region. And those prices are fairly stable since the trend has been to buy a home at any cost rather than rent.
roadrunner
<< <i>So gold drops 8 bucks today. To what do we owe this event?? >>
Normal correction off overbought conditions. $500+ by January '06.
Day to day, the movement can be opposite to what makes sense,
and often does.
The Refco implosion should have been immediately gold positive as are all of the inflation #'s hitting the past week. Maybe the Refco derivative bust will show up in gold prices in a few weeks. Add another Cat. 5 hurricane coming to the list too.
roadrunner
The trend for gold is still up despite todays drop. Someday the dollar will regain confidence (and price vs gold), but not until government spending gets under control.
roadrunner
Many formally blue chip companies are on the verge of bankruptcy.
The housing bubble is real and of major concern.
Much of the population of the Nation, live check to check with no cash reserves.
Interest rates are due to increase at an accelerated rate by the end of this year and
thru next year.
All in all, I dont really understand hoe the stock market retaines its current levels.
Camelot