yepper, while that seems to have been a fool's rush, the safety of the metal is surely on people's minds now, particularly with the media screaming "Highest in 8 years". It may be like the Katrina effect...if anything startles the herd, the stuff could rocket. Maybe it will pull back just a bit more and then folks can grab some for cheap.
Any kind of activity up or down is a play right now, it seems.
Inflation is LOW, there is NOT a housing bubble in the warm states, (only for foolish speculators) profits arer good to better for most SP 500 companies except the autos, and interest rates will stay low. Oil will start to get back to normal - 6 to 9 month futures showing strong signs of this. GOLD and Silver are NOT safe havens.
WHY?
Global manufacturing and services and the HIGH U.S. Bond rates compared to the other big countries - primarily Japan and Germany - will keep rates LOW. Inflation is not there - just oil making it look like it.
Like I detailed in my other thread, Motley fool: When the small investor thinks the market is a poor place to be, stocks will grow. A challenge for the markets to get through October. You watch December and January.
<< <i>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.
roadrunner >>
Roadrunner,
I agree that monetary policy can and does affect the value of the dollar by contracting the money supply. I do believe, however, that fiscal policy overspending is the root causes behind this even more than Greenspan's easy money policies. Until we get our fiscal policies in order (especially on the spending side - which means entitlements), we are doomed to the long term trend of a lower dollar (even if tight monetary policy interupts the long term trend with a short term boost).
<< <i>Inflation is LOW, there is NOT a housing bubble in the warm states, (only for foolish speculators) profits arer good to better for most SP 500 companies except the autos, and interest rates will stay low. Oil will start to get back to normal - 6 to 9 month futures showing strong signs of this. GOLD and Silver are NOT safe havens. >>
WOW! Being a contrarian is one thing, but flying in the face of reality is quite another.
Inflation, real inflation, not the cooked books from the Feds, is running around 7-9% and has been for at least 6 quarters now, probably more like the last 8 or more.
Houston, Texas qualifies as a warm state and the housing bubble is already bursting around here. Over the last 20+ years there have been an average of 14,000 homes for sale in any given month. In the last 18 months it has been running at over 40,000 and in just the last three to four months it is at around 70,000.
I recently sold my home and had several neighbors who have sold theirs in the last 18 months. Most were lucky to gain a few percent or break even and some lost on the transaction. I lost one neighbor due solely to the property taxes. Prices are dropping around here, that's just a plain and simple fact. I was able to purchase a larger place in a better neighborhood at a bit less than 100K of it's assesed value. This home had been on the market for 8 months with virtually no lookers. The seller was an elderly lady who couldn't keep up with the taxes and repairs and was very motivated as she was caught in the squeeze. Property taxes go up 10% a year around here with no end in sight. That means they double every 7 years. That sort of insanity can't continue much longer. City services have also gone up as much as 800% on water and sewer bills in the last 18 months with no increase in the services.
I keep very good records on all my bills and have for over a decade. I can look back and see 250% increases in electricity and 400% increases in natural gas in just the last 3 years. This is with the same or less usage as I have gotten to be very conservative in those areas. It's pretty sad when your water bill is higher than your electric bill and that happened to me last spring for one particularly fair month when the air conditioner wasn't being used constantly.
To say there is not a housing bubble and that inflation is low is a remarkable statement, particularly when there is no basis in fact for it, at least not where I live. I have noticed interest rates going up as well. That was a big reason I bought a new place when I did. The best rates are already at least a half percent higher than they were 3 months ago.
As far as precious metals go.... well, silver and gold have been very good to me over the last 3+ years. I'd rather not go into particulars as some will no doubt accuse me of bragging if I do so. But really, all you have to do is look at the bull market we've been in for the last few years and the increase should be obvious.
So I suppose I'll keep speculating and flipping bullion, I've done reasonably well at it so far. I have a real job that pays me comfortably, but it's a big plus to add a nice nest egg through metals. Just call me foolish, I guess.
BTW, what is normal for oil/gasoline prices? I'm paying $3 a gallon right now. Normal to me would be $1.50 and I doubt I'll ever see that again. Regardless of the cost per barrel, the oil companies aren't going to pass on any savings. You have noticed their profits are at all time highs, haven't you? They aren't known for their charitable ways, at least not in my lifetime they haven't been.
Not to argue, but I just don't see things the way you paint them.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
“Inflation is LOW, there is NOT a housing bubble in the warm states, (only for foolish speculators) profits are good to better for most SP 500 companies”
Wow LLOYD, I don’t know who’s Wall Street report you are reading, but you better throw that report away and read the headlines.
SUPER STAGFLATION!!!
NEW YORK (CNN/Money) - A price squeeze is coming to America. The government's Producer Price Index report Tuesday showed the highest increases in prices are still far away from the checkout line. Last week's jump in prices paid by consumers was the biggest in 25 years. Do businesses finally start to pass through the increased costs to consumers?
WASHINGTON, Oct 18 (Reuters) - Record fuel costs pushed inflation higher across the world last month, and U.S. producer prices, prices received by farms, factories and refineries, rose 6.9 percent in September from a year earlier, the biggest increase since November 1990
October 19, 2005 The U.S. Treasury printed $3.8 billion in actual cash last week, this amounts to about $27 for every person in America. Experts warn that heavy debt threatens American economy
The Associated Press You owe $145,000. And the bill is rising every day.
I think you are looking at things too recently. You say you keep good records. Go back 10 or 15 years and tell me what the increases have been. I dont doubt that you are seeing higher prices right now, but put them in perspective. I think you will find that these recent price gains are an abberation and that the smoothed increases look much more reasonable.
You are used to paying $1.50 for gas, but I paid nearly that much back in 1990. Then 7 years later I was paying 95 cents. We enjoyed unreasonably low oil prices for decades. In 1997 a barrel of oil was $12. That is a rediculously low number. In actually gasoline has doubled in 15 years. That is a 5% per year increase. Numbers can be very easily manipulated to prove a point. The govt does it and members of this board do it.
You say you bought your new house for 100k under its assessed value and nobody looked at it in 8 years. That tells me 2 things. Either it was grossly overvalued or it is a POS. I doubt the latter- you wouldnt have bought it- so it must have been overvalued, therefor there is no housing bubble in your area and perhaps Lloyd may be right.
Taxes are the biggest hinderance to increasing property values, you and I havent enjoyed the gains in other parts of the country due to these high taxes. But I dont give a rats ass if others' houses go up. I enjoy where I live and plan to stay here, especially if we can kick Hillary and Schumer out of office
This morning it's all about copper, as the metal hit a record $4,000 a metric ton (and a high of $4,005) in London on renewed fears of supply shortages and increased demand from countries such as China (China builds roughly 20 mln homes each year, which requires raw materials like copper). Production shortages of copper in Zambia, Africa's largest copper producing nation, is also making copper traders bullish
... Silver falls to $7.60 an ounce from $7.73 in the morning London fixing... Many gold traders are saying that the yellow metal has been tracking oil prices recently, but today some value players seem to be jumping in after the recent slide in prices... Some contacts told us that any upswing in crude oil would make them buyers of gold as a hedge against any inflationary overtones. Dec gold is up $0.70 to $466.50 per troy ounce.
Energy prices are lower across the board this morning on word that Hurricane Wilma has for now lost some steam. Nov crude oil is off 61 cents on access trading to $61.80 pbl (range is $61.76 to $62.44). Traders are eagerly awaiting natural gas inventory stats at 10:30. Ahead of stats, natty is off 20 cents to $13.340 mbtu (access range is $13.34 to $13.60). Nov heating oil is called a 1.5 cents lower to $1.8983 a gallon (range is $1.8960 to $1.9165). Nov unleaded gas is off .0063 to $1.67..
. It's interesting that no one is really talking about the shellacking that nickel prices have recently seen (north of a $1000 haircut)...
A U.S. Senate panel approved a budget plan for the U.S. Agriculture Dept that would cut $3 bln from the USDA budget over 5 yrs, and most commodity subsidies by 2.5% through 2010 (word from our contacts is that Republicans may vote to raise the total USDA cuts to $4.5 bln). Crops that would be affected by the proposed subsidy reductions are cotton, barley, wheat, corn, soybeans, rice, hay, wool, and peanuts.
11:22 Crude Oil (60.20 -2.21) breaks to lows of day... Dow -17, Nasdaq -7.2
<< <i>Inflation is LOW, there is NOT a housing bubble in the warm states, (only for foolish speculators) profits arer good to better for most SP 500 companies except the autos, and interest rates will stay low. Oil will start to get back to normal - 6 to 9 month futures showing strong signs of this. GOLD and Silver are NOT safe havens. >>
If inflation is low, why does the Fed keep raising rates?
If inflation is low, why does my food, gasoline, property taxes, electricity etc. cost a lot more than a year ago?
If inflation is low, why does the money supply keep expanding?
If inflation is low, why is the price of gold going up against all currencies?
If inflation is low, why are there bubbles all over the place?
Dude, fiat currencies don't work. They have failed time and time again over history. Like this time will be different?
You say you bought your new house for 100k under its assessed value and nobody looked at it in 8 years. That tells me 2 things. Either it was grossly overvalued or it is a POS. I doubt the latter- you wouldnt have bought it- so it must have been overvalued, therefor there is no housing bubble in your area and perhaps Lloyd may be right.
Taxes are the biggest hinderance to increasing property values, you and I havent enjoyed the gains in other parts of the country due to these high taxes. But I dont give a rats ass if others' houses go up. I enjoy where I live and plan to stay here, especially if we can kick Hillary and Schumer out of office >>
Uh, look again. I said it had been on the market for 8 MONTHS, not years, without many lookers. Was it overvalued? No, not compared to others in the same neighborhood. The appraised value is done by the county, but my homeowners insurance appraisal was within 1% of the county apraisal, so I'd say the value is reasonably correct. There are 3 others in my new neighborhood that I looked at and they are still for sale. A POS? Hardly, it's far and away a bigger and nicer home than I ever dreamed of owning, though it did need some repairs and upgrades. The seller was on a fixed income and could barely afford the increasing taxes, much less repairs. I did sink around 18K into repairs and a bit more than that into upgrades/remodeling.
Back to what I said earlier, there have been nearly 3 times as many houses on the market in the last 18 months than the 20 year average. Over the summer that number has increased to 5 times as many. Prices are dropping. I sold my previous house for around 15-18% less than I could have gotten for it 2 years ago. Even my real estate agent, whom I've known as a friend for 5-6 years, admited to me that the Houston housing bubble was deflating and he was hoping there was no loud and masive burst on the near horizon. He did tell me that sales were way down all over the area. So, I have to conclude that the housing bubble in southeast Texas is approaching a bursting point. There is indeed a bubble. Combining that with inflation and skyrocketing local taxes and city services and it's not a pretty picture.
Sure, I agree that recent(as in the last 2+ years) prices have been an abberation when compared to the last 10 to 15 years. But to me, that is what inflation is. A rapid increase that stands out in comparison to the way things have been.
The fact is that virtually everything has gone up in price, gone up in the sense that it's a noticable change. One that nearly everyone over 30 can recognize. 2-3% increases wouldn't do that, we are seeing large increases such that even the average guy on the street is noticing. In Houston, it's the local taxes that are devastating the middle class. Stories of people losing their homes to taxes are an everyday occurance around here.
Our companies fix salaries to inflation/cost of living. We rarely get raises without job promotions. Last February, everyone got a 22% increase across the board based on the cost of living. Nobody complained obviously, but for most of us it just meant we were back where we were 3 years ago. This last summer I asked for a review and presented my case on my rising costs of just keeping even. I got an additional 41% increase and there were few questions asked, the entire meeting lasted no more than 30 minutes. I'm sure a part of it was based on job performance and added responsibilities as I only asked for 20% more to start with. My point being that our companies, notorious for not giving out raises as we are all fairly well paid to start with, didn't bat an eye when confronted with the rising costs of living in Houston. I should add that we have offices all over the country, so I can't speak to what others are facing elsewhere.
Edited by spellchecker 7.95e. See, even my spellchecker has inflated.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Energy Stocks had all the downturn "weighting" of the DOW with their drop today, because of falling oil prices... >>
Humm poor me. I haven't looked but what's oil going for $60 or $61 a barrell? I've been in the oil game for 30 years and I think wishful thinking isn't going to help much. If it drops to $50 that'll be fine I have plenty of money in my "Short term investment fund" to average down.
Oils out of season but heating oil and natural gas makes it's play this time of year.
Good point, Clank. It seems to be an oft-repeated story that people are swindling companies out of hundreds of millions of dollars at a time. This at the same time that many companies are going belly up. What a world.
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
Considering that there are hundreds of Trillions of dollars in derivatives out there, there's lot that can go wrong when trades go bust. Interest rate derivatives are the bulk of the game.
Inflation may be "low" as published by the BLS but others have performed similar studies without all the "adjustment's" that the BLS has tossed in over the years: substitution, hedonics, equivalent rent, geometric averaging, etc. It's a far cry from the 1980 version when none of this existed. With today's rigged CPI a rate that reached 10% may will be roughly equivalent to the 20% rates seen in 1980. Unadjusted numbers fall out in the 7-9% range the Deadhorse alluded to. Frankly, it is impossible to increase the money supply by a factor of 5X since 1980 and not eventually see that result eventually play out. If your coins have increased by 5X or more you know why. Gold has stayed about the same. A contrarian play but with little risk imo since gold's 4 year chart is steadily upwards with no signs of changing.
Stock movements that defy logic: ........don't forget that the FED and Treasury are in the stock, bond, and PM's market every week (through brokerage firms like GS, JPM, Citi, etc.) ensuring that the markets stay looking good. Their tracks are often found in the last or first hour of trading. Moosetracks that is.
<< <i> Stock movements that defy logic: ........don't forget that the FED and Treasury are in the stock, bond, and PM's market every week (through brokerage firms like GS, JPM, Citi, etc.) ensuring that the markets stay looking good. Their tracks are often found in the last or first hour of trading. Moosetracks that is. >>
Yep, the PPT.
Resistance is futile though, the markets will eventually go where they want to go, which is down.
Yes, but the goal is no longer to change the outcome, but just to prolong the current state of affairs so all those executive parachutes can fully open up to a soft landing for the connected ones.
I see it falling to 445-440 or so, then bouncing back up higher than it is now. Basically, the same trend as in the chart. Looking at the last 2 years, we might see gold go up for as long as another 2 months before it falls again....granted this is unscientific analysis based upon guessing where the line will go...
Mark Piersall Random Collector www.marksmedals.com
“Considering that there are hundreds of Trillions of dollars in derivatives out there, there's lot that can go wrong when trades go bust.”
Not long ago on our thread, someone here said that the most important thing today in the financial world was just protecting what you had. Almost all of the markets today are full of gamblers, and not investors. During the next few years millions of “investors” are going to lose all of their money in these games. The Refco deal is just part of the tip of the iceberg, look at today’s news,
"Refco, a leader in world markets for derivatives such as commodity and financial futures, went public in August, raising $583 million. Its share price peaked at over $30 in September. It closed on Thursday at 89.5 cents on the pink sheets."
One news report says that even Jim Rodgers had 360 million dollars in one of the Refco funds from his “Rodgers funds” doing commodity trading, and that money is now perhaps gone.
Gold is up – no wait a minute its down
Stocks are up – no wait a minute their down
Interest rates are down – no wait a minute they are up
Muni Bonds are safe- wait they are not
The investment landscape today is like living in Las Vegas with no way out of the city.
As the Worlds Trillions of paper dollars, Yuans, Euros, etc. begin to unwind, millions of “investors” that believed they were in safe long term investments are going to see their assets burned to the ground.
My opinion of all of this is that the only safety today is to withdraw to local markets, and private investments that are directly controlled by YOU!
Sure taking personal responsibility for your own families assets is extra work, but if you want to keep what you have earned, then get out of the game.
We must all start believing our own eyes, and doing our own thinking, and that is what this thread is all about, to keep each other informed, and make us think.
Unless you live in a crazy bubble area, put your money in some local real property that has real cash flow.
Buy some Gold and Silver on the drops.
Invest in high quality coins that have some true rarity.
Keep your cash in a local Bank in short term C.D.’S until the rates stop going up.
Pay off all credit cards, or other loans that have high interests rates.
Work hard and avoid paying every tax you can.
Become a saver, and not a spender, stop buying loads of junk your family does not need.
“The problem with rentals is cash flows out as fast as it flows in.”
“At today's prices, anyone holding RESIDENTIAL income rentals is either a fool or someone really hard up for conversation at parties.”
O.K. Guys please note what I said, “Unless you live in a crazy bubble area, put your money in some local real property that has real cash flow.”
The key word here is bubble, so no, real property will not work if you live in an area that the prices have increased 100% the last couple of years.
What I am saying here is stop gambling, and start investing, back to basics.
In my area in Texas you can still buy a nice small 3 bedroom one and one half bath for around $125,00. The rent on these is currently about $1,300 per month.
I know a bunch of folks that lost $250,000 in the stock market crash that have never recovered; it’s been 6 years.
Forgetting that houses were even cheaper 6 years ago, lets take the $250,000 and buy two houses and pay cash. The rent is $2,600 per month for the two, so $31,200 per year and $187,200 in six years. Take 10% for maintenance so minus $18,700, tale off $400 per month for real property taxes and Ins. for 6six years = $28,800. Total of $47,500.
$187,200 minus $47,500 = $139,700
Lets say there is no vacancy, no appreciation, no tax write off’s for depreciation, no income tax, since all of these things would equal out.
You have to ask yourself if six years ago it would have been better to have pulled your $250,000 out of the stock market and bought these two rent houses.
Today you would still have your $250,000 equity plus the $139,700 in rent for a total of $389,700
Please remember two important things, inflation drives appreciation in housing, and there is NO national real-estate market to crash. Yes over heated markets with absurd price increases may drop in isolated areas, but while some markets are dropping most are still stable.
I'll take my 10% on local MORTGAGES where the loan is less than half of market value. No plumbin woes in middle of night and if they default, I get the building.
In fact buy a good property that is 10% under the market, get another 5% knocked off for paying cash. Spend a little money on gingerbread items, sell it for 25% more than you paid, carry the paper and then get even 8%.
This looks pretty good compared to today’s volatility! A good rate of return secured by a hard asset.
Combined this with some other hard assets to balance inflation and your on your way.
The thing that really kills me is Wall Street keeps saying diversify, diversify, but everything they are selling is just more paper, and it ain’t your paper!
Steeter, certainly a good correction is coming to gold bullion but whether it is now or in a few months remains to be seen. The last 2 years, the late October to December periods have been strong gainers for gold. My gut feel says there is still too much pent up demand in gold and things are still gathering in this $460-$475 range for a push towards $500. But....I sold 20% of my "Saint" position on this latest move up and don't know if that was wise or not. The jury is still out. One thing is for sure, you can't lose money taking a profit.....unless of course inflation ate away all your gains. I'll buy back that 20% stake on the next sustained weakness.
I know corrections are part of the up/down game but if the fundementals are in place for large upwards move it may be risky to lose your position hoping to catch a few bucks on a downward buyback play. It looks like everything is in place for a move well above 500 and few reasons to believe it will ever come back below that afterward. Gold is no longer a "dollar' issue, its a world commodity and there are a lot of Asian/Indians coming into the game. Even future strength in the dolla via higher rates won't compensate for millions of newly affluent who are aquiring gold they will probably hold for a longer term than most Wall Street speculators.
I read a good article about how the players, dollar, Euro, Yuan are actually moving to try and weaken thier currencies against each other to boost thier exports. The country with a weak currency has export advantages. How long till the people of the world figure out that there is no SAFE paper.
Does anyone have any info on the gold reserves of the US, FT. Knox etc.
<< <i>“The problem with rentals is cash flows out as fast as it flows in.”
“At today's prices, anyone holding RESIDENTIAL income rentals is either a fool or someone really hard up for conversation at parties.”
O.K. Guys please note what I said, “Unless you live in a crazy bubble area, put your money in some local real property that has real cash flow.”
The key word here is bubble, so no, real property will not work if you live in an area that the prices have increased 100% the last couple of years.
What I am saying here is stop gambling, and start investing, back to basics.
In my area in Texas you can still buy a nice small 3 bedroom one and one half bath for around $125,00. The rent on these is currently about $1,300 per month.
I know a bunch of folks that lost $250,000 in the stock market crash that have never recovered; it’s been 6 years.
Forgetting that houses were even cheaper 6 years ago, lets take the $250,000 and buy two houses and pay cash. The rent is $2,600 per month for the two, so $31,200 per year and $187,200 in six years. Take 10% for maintenance so minus $18,700, tale off $400 per month for real property taxes and Ins. for 6six years = $28,800. Total of $47,500.
$187,200 minus $47,500 = $139,700
Lets say there is no vacancy, no appreciation, no tax write off’s for depreciation, no income tax, since all of these things would equal out.
You have to ask yourself if six years ago it would have been better to have pulled your $250,000 out of the stock market and bought these two rent houses.
Today you would still have your $250,000 equity plus the $139,700 in rent for a total of $389,700
Please remember two important things, inflation drives appreciation in housing, and there is NO national real-estate market to crash. Yes over heated markets with absurd price increases may drop in isolated areas, but while some markets are dropping most are still stable. >>
Please remember two important things, inflation drives appreciation in housing, and there is NO national real-estate market to crash. Yes over heated markets with absurd price increases may drop in isolated areas, but while some markets are dropping most are still stable. >>
Actually inflation drives interest rates that hurt housing and with the huge run up on housing I wouldn't want to bet against it.
<< <i>Investors have been hoping the new Fed chief would be less hawkish than Greenspan on inflation and keeps interest rates lower to spur the economy, but analysts say Bernanke will probably stay with the central bank's rate-tightening campaign.
>>
Good thing we replaced that "hawk" with one who's not so tough on inflation control
Be sure to look up whenever you hear a helicopter go by.
Yes, with "helicopter money" Ben at the controls, this has all but assured all coin enthusiasts and speculators as well, that our market will continue to stay strong (as he continues to inflate away).
RR - going back to your earlier post, I was amused to see that you sold some gold, since I have generally been cautious on gold, but actually increased my holdings this year! My history with market timing is not particularly good -- I'm fully expecting a major correction.
Higashiyama, yeah, I expected a quick pull back as we have seen 3x before......but this one has been stubborn. It just might be that gold has taken the next step up. I still have 80% of my position so that's a healthy enough stake. If there is weakness soon, I will buy back in. If one is in this to sit tight for the long haul, there really isn't a bad time to be buying. Just keep buying consistently on any pullbacks. 8-10 weeks ago was a great time to add to one's stocks. Actually most of this year was a good time to be buying. For the most part no one cared. Things changed quickly in 6 weeks.
Front page article on the Monday October 24, 2005 issue of the New York Times, a fascinating article on how expensive it is to generate just 1 ounce of gold today!
I have this article saved in case the link does not work. PM me if you need to see this article as I do not believe I am permitted to reproduce this article without permission from the NY Times.
Comments
<< <i>
All in all, I dont really understand hoe the stock market retaines its current levels. >>
It's manipulated by the Sith Lords.
yepper, while that seems to have been a fool's rush, the safety of the metal is surely on people's minds now, particularly with the media screaming "Highest in 8 years". It may be like the Katrina effect...if anything startles the herd, the stuff could rocket. Maybe it will pull back just a bit more and then folks can grab some for cheap.
Any kind of activity up or down is a play right now, it seems.
WHY?
Global manufacturing and services and the HIGH U.S. Bond rates compared to the other big countries - primarily Japan and Germany - will keep rates LOW. Inflation is not there - just oil making it look like it.
Like I detailed in my other thread, Motley fool: When the small investor thinks the market is a poor place to be, stocks will grow. A challenge for the markets to get through October. You watch December and January.
<< <i>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.
roadrunner
>>
Roadrunner,
I agree that monetary policy can and does affect the value of the dollar by contracting the money supply. I do believe, however, that fiscal policy overspending is the root causes behind this even more than Greenspan's easy money policies. Until we get our fiscal policies in order (especially on the spending side - which means entitlements), we are doomed to the long term trend of a lower dollar (even if tight monetary policy interupts the long term trend with a short term boost).
Greg (500Bay)
to but the national debt bonds. The only way to do that is to have the highest
interest rates around. The rush will soon be on folks as enormous mountains of debt
must be sold to the ...suckers........I mean investors.
Camelot
<< <i>Inflation is LOW, there is NOT a housing bubble in the warm states, (only for foolish speculators) profits arer good to better for most SP 500 companies except the autos, and interest rates will stay low. Oil will start to get back to normal - 6 to 9 month futures showing strong signs of this. GOLD and Silver are NOT safe havens. >>
WOW! Being a contrarian is one thing, but flying in the face of reality is quite another.
Inflation, real inflation, not the cooked books from the Feds, is running around 7-9% and has been for at least 6 quarters now, probably more like the last 8 or more.
Houston, Texas qualifies as a warm state and the housing bubble is already bursting around here. Over the last 20+ years there have been an average of 14,000 homes for sale in any given month. In the last 18 months it has been running at over 40,000 and in just the last three to four months it is at around 70,000.
I recently sold my home and had several neighbors who have sold theirs in the last 18 months. Most were lucky to gain a few percent or break even and some lost on the transaction. I lost one neighbor due solely to the property taxes. Prices are dropping around here, that's just a plain and simple fact. I was able to purchase a larger place in a better neighborhood at a bit less than 100K of it's assesed value. This home had been on the market for 8 months with virtually no lookers. The seller was an elderly lady who couldn't keep up with the taxes and repairs and was very motivated as she was caught in the squeeze. Property taxes go up 10% a year around here with no end in sight. That means they double every 7 years. That sort of insanity can't continue much longer. City services have also gone up as much as 800% on water and sewer bills in the last 18 months with no increase in the services.
I keep very good records on all my bills and have for over a decade. I can look back and see 250% increases in electricity and 400% increases in natural gas in just the last 3 years. This is with the same or less usage as I have gotten to be very conservative in those areas. It's pretty sad when your water bill is higher than your electric bill and that happened to me last spring for one particularly fair month when the air conditioner wasn't being used constantly.
To say there is not a housing bubble and that inflation is low is a remarkable statement, particularly when there is no basis in fact for it, at least not where I live. I have noticed interest rates going up as well. That was a big reason I bought a new place when I did. The best rates are already at least a half percent higher than they were 3 months ago.
As far as precious metals go.... well, silver and gold have been very good to me over the last 3+ years. I'd rather not go into particulars as some will no doubt accuse me of bragging if I do so. But really, all you have to do is look at the bull market we've been in for the last few years and the increase should be obvious.
So I suppose I'll keep speculating and flipping bullion, I've done reasonably well at it so far. I have a real job that pays me comfortably, but it's a big plus to add a nice nest egg through metals. Just call me foolish, I guess.
BTW, what is normal for oil/gasoline prices? I'm paying $3 a gallon right now. Normal to me would be $1.50 and I doubt I'll ever see that again. Regardless of the cost per barrel, the oil companies aren't going to pass on any savings. You have noticed their profits are at all time highs, haven't you? They aren't known for their charitable ways, at least not in my lifetime they haven't been.
Not to argue, but I just don't see things the way you paint them.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Food is going up
Gasoline is going up
Repair work on the house is more expensive
Repaires to my car are going up
Going out to movies and dinner is going up
Health Insurance is going up
My pension is fixed and not going up
I just hope my pension just doesnt go away.
Shoes are going up
Essential metals are going up
Tires are going up.
Working peoples wages are falling behind inflation.
Interest rates are going up on both short term and long term debt
Homes are more expensive
Utilities are going up
My blood pressure is going up
My age is going up
The only thing going down is my libido.
Just where is this stable price economy
I hear smoe people talking about.
Camelot
Wow LLOYD, I don’t know who’s Wall Street report you are reading, but you better throw that report away and read the headlines.
SUPER STAGFLATION!!!
NEW YORK (CNN/Money) - A price squeeze is coming to America.
The government's Producer Price Index report Tuesday showed the highest increases in prices are still far away from the checkout line.
Last week's jump in prices paid by consumers was the biggest in 25 years.
Do businesses finally start to pass through the increased costs to consumers?
WASHINGTON, Oct 18 (Reuters) - Record fuel costs pushed inflation higher across the world last month, and U.S. producer prices, prices received by farms, factories and refineries, rose 6.9 percent in September from a year earlier, the biggest increase since November 1990
October 19, 2005
The U.S. Treasury printed $3.8 billion in actual cash last week, this amounts to about $27 for every person in America.
Experts warn that heavy debt threatens American economy
The Associated Press
You owe $145,000. And the bill is rising every day.
I think you are looking at things too recently. You say you keep good records. Go back 10 or 15 years and tell me what the increases have been. I dont doubt that you are seeing higher prices right now, but put them in perspective. I think you will find that these recent price gains are an abberation and that the smoothed increases look much more reasonable.
You are used to paying $1.50 for gas, but I paid nearly that much back in 1990. Then 7 years later I was paying 95 cents. We enjoyed unreasonably low oil prices for decades. In 1997 a barrel of oil was $12. That is a rediculously low number. In actually gasoline has doubled in 15 years. That is a 5% per year increase. Numbers can be very easily manipulated to prove a point. The govt does it and members of this board do it.
You say you bought your new house for 100k under its assessed value and nobody looked at it in 8 years. That tells me 2 things. Either it was grossly overvalued or it is a POS. I doubt the latter- you wouldnt have bought it- so it must have been overvalued, therefor there is no housing bubble in your area and perhaps Lloyd may be right.
Taxes are the biggest hinderance to increasing property values, you and I havent enjoyed the gains in other parts of the country due to these high taxes. But I dont give a rats ass if others' houses go up. I enjoy where I live and plan to stay here, especially if we can kick Hillary and Schumer out of office
Knowledge is the enemy of fear
... Silver falls to $7.60 an ounce from $7.73 in the morning London fixing... Many gold traders are saying that the yellow metal has been tracking oil prices recently, but today some value players seem to be jumping in after the recent slide in prices... Some contacts told us that any upswing in crude oil would make them buyers of gold as a hedge against any inflationary overtones. Dec gold is up $0.70 to $466.50 per troy ounce.
Energy prices are lower across the board this morning on word that Hurricane Wilma has for now lost some steam. Nov crude oil is off 61 cents on access trading to $61.80 pbl (range is $61.76 to $62.44). Traders are eagerly awaiting natural gas inventory stats at 10:30. Ahead of stats, natty is off 20 cents to $13.340 mbtu (access range is $13.34 to $13.60). Nov heating oil is called a 1.5 cents lower to $1.8983 a gallon (range is $1.8960 to $1.9165). Nov unleaded gas is off .0063 to $1.67..
. It's interesting that no one is really talking about the shellacking that nickel prices have recently seen (north of a $1000 haircut)...
A U.S. Senate panel approved a budget plan for the U.S. Agriculture Dept that would cut $3 bln from the USDA budget over 5 yrs, and most commodity subsidies by 2.5% through 2010 (word from our contacts is that Republicans may vote to raise the total USDA cuts to $4.5 bln). Crops that would be affected by the proposed subsidy reductions are cotton, barley, wheat, corn, soybeans, rice, hay, wool, and peanuts.
11:22 Crude Oil (60.20 -2.21) breaks to lows of day... Dow -17, Nasdaq -7.2
Knowledge is the enemy of fear
<< <i>Inflation is LOW, there is NOT a housing bubble in the warm states, (only for foolish speculators) profits arer good to better for most SP 500 companies except the autos, and interest rates will stay low. Oil will start to get back to normal - 6 to 9 month futures showing strong signs of this. GOLD and Silver are NOT safe havens.
>>
If inflation is low, why does the Fed keep raising rates?
If inflation is low, why does my food, gasoline, property taxes, electricity etc. cost a lot more than a year ago?
If inflation is low, why does the money supply keep expanding?
If inflation is low, why is the price of gold going up against all currencies?
If inflation is low, why are there bubbles all over the place?
Dude, fiat currencies don't work. They have failed time and time again over history. Like this time will be different?
Gettin giddy yet?
Whie governments and the Fed attempt to streer a course in the middle
stupidity , bad luck and world events often make that impossible. Politically,
governments will almost always go the way of inflation . By inflating the money
supply you keep the game going a while longer and monitize the National debt
with cheap, abundant money. The longer this goes on, the deeper and longer
becomes the eventual ramifications. After the severe pain of a long period of stagflation,Hyperinflation
or recession and depression, the game start over anew. Nothing in the history of man has ever
been played any differently. When the Ceasars needed money, they debased the currency untill
the coinage was only silver wash onbase metal. With the loss of economic strength and stability,
so went Rome and so eventually went the Empire. It is impossible to have a war and not raise Federal taxes.
Johnson proved that, with Viet Nam. Nixon proved that wage and price freezes only make matters worse.
Camelot
<< <i>Deadhorse,
You say you bought your new house for 100k under its assessed value and nobody looked at it in 8 years. That tells me 2 things. Either it was grossly overvalued or it is a POS. I doubt the latter- you wouldnt have bought it- so it must have been overvalued, therefor there is no housing bubble in your area and perhaps Lloyd may be right.
Taxes are the biggest hinderance to increasing property values, you and I havent enjoyed the gains in other parts of the country due to these high taxes. But I dont give a rats ass if others' houses go up. I enjoy where I live and plan to stay here, especially if we can kick Hillary and Schumer out of office
Uh, look again. I said it had been on the market for 8 MONTHS, not years, without many lookers. Was it overvalued? No, not compared to others in the same neighborhood. The appraised value is done by the county, but my homeowners insurance appraisal was within 1% of the county apraisal, so I'd say the value is reasonably correct. There are 3 others in my new neighborhood that I looked at and they are still for sale. A POS? Hardly, it's far and away a bigger and nicer home than I ever dreamed of owning, though it did need some repairs and upgrades. The seller was on a fixed income and could barely afford the increasing taxes, much less repairs. I did sink around 18K into repairs and a bit more than that into upgrades/remodeling.
Back to what I said earlier, there have been nearly 3 times as many houses on the market in the last 18 months than the 20 year average. Over the summer that number has increased to 5 times as many. Prices are dropping. I sold my previous house for around 15-18% less than I could have gotten for it 2 years ago. Even my real estate agent, whom I've known as a friend for 5-6 years, admited to me that the Houston housing bubble was deflating and he was hoping there was no loud and masive burst on the near horizon. He did tell me that sales were way down all over the area. So, I have to conclude that the housing bubble in southeast Texas is approaching a bursting point. There is indeed a bubble. Combining that with inflation and skyrocketing local taxes and city services and it's not a pretty picture.
Sure, I agree that recent(as in the last 2+ years) prices have been an abberation when compared to the last 10 to 15 years. But to me, that is what inflation is. A rapid increase that stands out in comparison to the way things have been.
The fact is that virtually everything has gone up in price, gone up in the sense that it's a noticable change. One that nearly everyone over 30 can recognize. 2-3% increases wouldn't do that, we are seeing large increases such that even the average guy on the street is noticing. In Houston, it's the local taxes that are devastating the middle class. Stories of people losing their homes to taxes are an everyday occurance around here.
Our companies fix salaries to inflation/cost of living. We rarely get raises without job promotions. Last February, everyone got a 22% increase across the board based on the cost of living. Nobody complained obviously, but for most of us it just meant we were back where we were 3 years ago. This last summer I asked for a review and presented my case on my rising costs of just keeping even. I got an additional 41% increase and there were few questions asked, the entire meeting lasted no more than 30 minutes. I'm sure a part of it was based on job performance and added responsibilities as I only asked for 20% more to start with. My point being that our companies, notorious for not giving out raises as we are all fairly well paid to start with, didn't bat an eye when confronted with the rising costs of living in Houston. I should add that we have offices all over the country, so I can't speak to what others are facing elsewhere.
Edited by spellchecker 7.95e. See, even my spellchecker has inflated.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Sweet.
<< <i>Take a look at what the stock market is doing today.
Sweet. >>
It was up 128 yesterday. Down 133 today. What does that mean?
Knowledge is the enemy of fear
<< <i>
<< <i>Take a look at what the stock market is doing today.
Sweet. >>
It was up 128 yesterday. Down 133 today. What does that mean? >>
Not sure, but something spooked the sheep today. Volatility Index spiked, up almost 18 percent!
<< <i>Energy Stocks had all the downturn "weighting" of the DOW with their drop today, because of falling oil prices... >>
Humm poor me. I haven't looked but what's oil going for $60 or $61 a barrell? I've been in the oil game for 30 years and I think wishful thinking isn't going to help much. If it drops to $50 that'll be fine I have plenty of money in my "Short term investment fund" to average down.
Oils out of season but heating oil and natural gas makes it's play this time of year.
<< <i>Energy Stocks had all the downturn "weighting" of the DOW with their drop today, because of falling oil prices... >>
So again, how does stagflation make the stock market an attractive investment?
I believe the bust is happening already, and the boom happened a while back.
<< <i>
<< <i>Take a look at what the stock market is doing today.
Sweet. >>
It was up 128 yesterday. Down 133 today. What does that mean? >>
For some reason I don't understand, the market has been moving up on days when when oil is up.
It would seem Dow components are expected to do better when oil is high and the economy when it is low.
Edited to correct first sentence (it was backward). D'oh. The market certainly is irrational.
<< <i>
<< <i>
<< <i>Take a look at what the stock market is doing today.
Sweet. >>
It was up 128 yesterday. Down 133 today. What does that mean? >>
For some reason I don't understand the market has been moving down on days when when oil is up.
It would seem Dow components are expected to do better when oil is high and the economy when it is low. >>
The markets have been disconnected from reality for a while now. Using logic doesn't work.
<< <i>The markets have been disconnected from reality for a while now. >>
Here is reality
Looters are not exclusive to New Orleans or Iraq
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>
<< <i>The markets have been disconnected from reality for a while now. >>
Here is reality
Looters are not exclusive to New Orleans or Iraq >>
Yeah, that Refco thing... That could only be the tip of the iceberg.
How many more like that out there, waiting to implode?
Inflation may be "low" as published by the BLS but others have performed similar studies without all the "adjustment's" that the BLS has tossed in over the years: substitution, hedonics, equivalent rent, geometric averaging, etc. It's a far cry from the 1980 version when none of this existed. With today's rigged CPI a rate that reached 10% may will be roughly equivalent to the 20% rates seen in 1980. Unadjusted numbers fall out in the 7-9% range the Deadhorse alluded to. Frankly, it is impossible to increase the money supply by a factor of 5X since 1980 and not eventually see that result eventually play out. If your coins have increased by 5X or more you know why. Gold has stayed about the same. A contrarian play but with little risk imo since gold's 4 year chart is steadily upwards with no signs of changing.
Stock movements that defy logic: ........don't forget that the FED and Treasury are in the stock, bond, and PM's market every week (through brokerage firms like GS, JPM, Citi, etc.) ensuring that the markets stay looking good. Their tracks are often found in the last or first hour of trading. Moosetracks that is.
5 year gold chart
roadrunner
<< <i>
Stock movements that defy logic: ........don't forget that the FED and Treasury are in the stock, bond, and PM's market every week (through brokerage firms like GS, JPM, Citi, etc.) ensuring that the markets stay looking good. Their tracks are often found in the last or first hour of trading. Moosetracks that is.
>>
Yep, the PPT.
Resistance is futile though, the markets will eventually go where they want to go, which is down.
roadrunner
Do you look at that 5yr chart and see a correction to 430-440? in the next 30-45 days
Random Collector
www.marksmedals.com
“Considering that there are hundreds of Trillions of dollars in derivatives out there, there's lot that can go wrong when trades go bust.”
Not long ago on our thread, someone here said that the most important thing today in the financial world was just protecting what you had. Almost all of the markets today are full of gamblers, and not investors.
During the next few years millions of “investors” are going to lose all of their money in these games. The Refco deal is just part of the tip of the iceberg, look at today’s news,
"Refco, a leader in world markets for derivatives such as commodity and financial futures, went public in August, raising $583 million. Its share price peaked at over $30 in September. It closed on Thursday at 89.5 cents on the pink sheets."
One news report says that even Jim Rodgers had 360 million dollars in one of the Refco funds from his “Rodgers funds” doing commodity trading, and that money is now perhaps gone.
Gold is up – no wait a minute its down
Stocks are up – no wait a minute their down
Interest rates are down – no wait a minute they are up
Muni Bonds are safe- wait they are not
The investment landscape today is like living in Las Vegas with no way out of the city.
As the Worlds Trillions of paper dollars, Yuans, Euros, etc. begin to unwind, millions of “investors” that believed they were in safe long term investments are going to see their assets burned to the ground.
My opinion of all of this is that the only safety today is to withdraw to local markets, and private investments that are directly controlled by YOU!
Sure taking personal responsibility for your own families assets is extra work, but if you want to keep what you have earned, then get out of the game.
We must all start believing our own eyes, and doing our own thinking, and that is what this thread is all about, to keep each other informed, and make us think.
Unless you live in a crazy bubble area, put your money in some local real property that has real cash flow.
Buy some Gold and Silver on the drops.
Invest in high quality coins that have some true rarity.
Keep your cash in a local Bank in short term C.D.’S until the rates stop going up.
Pay off all credit cards, or other loans that have high interests rates.
Work hard and avoid paying every tax you can.
Become a saver, and not a spender, stop buying loads of junk your family does not need.
The problem with rentals is cash flows out as fast as it flows in.
“At today's prices, anyone holding RESIDENTIAL income rentals is either a fool or someone really hard up for conversation at parties.”
O.K. Guys please note what I said, “Unless you live in a crazy bubble area, put your money in some local real property that has real cash flow.”
The key word here is bubble, so no, real property will not work if you live in an area that the prices have increased 100% the last couple of years.
What I am saying here is stop gambling, and start investing, back to basics.
In my area in Texas you can still buy a nice small 3 bedroom one and one half bath for around $125,00.
The rent on these is currently about $1,300 per month.
I know a bunch of folks that lost $250,000 in the stock market crash that have never recovered; it’s been 6 years.
Forgetting that houses were even cheaper 6 years ago, lets take the $250,000 and buy two houses and pay cash.
The rent is $2,600 per month for the two, so $31,200 per year and $187,200 in six years.
Take 10% for maintenance so minus $18,700, tale off $400 per month for real property taxes and Ins. for 6six years = $28,800. Total of $47,500.
$187,200 minus $47,500 = $139,700
Lets say there is no vacancy, no appreciation, no tax write off’s for depreciation, no income tax, since all of these things would equal out.
You have to ask yourself if six years ago it would have been better to have pulled your $250,000 out of the stock market and bought these two rent houses.
Today you would still have your $250,000 equity plus the $139,700 in rent for a total of $389,700
Please remember two important things, inflation drives appreciation in housing, and there is NO national real-estate market to crash. Yes over heated markets with absurd price increases may drop in isolated areas, but while some markets are dropping most are still stable.
Hey man nothing wrong with that,
In fact buy a good property that is 10% under the market, get another 5% knocked off for paying cash.
Spend a little money on gingerbread items, sell it for 25% more than you paid, carry the paper and then get even 8%.
This looks pretty good compared to today’s volatility!
A good rate of return secured by a hard asset.
Combined this with some other hard assets to balance inflation and your on your way.
The thing that really kills me is Wall Street keeps saying diversify, diversify, but everything they are selling is just more paper, and it ain’t your paper!
I'll buy back that 20% stake on the next sustained weakness.
roadrunner
I read a good article about how the players, dollar, Euro, Yuan are actually moving to try and weaken thier currencies against each other to boost thier exports. The country with a weak currency has export advantages. How long till the people of the world figure out that there is no SAFE paper.
Does anyone have any info on the gold reserves of the US, FT. Knox etc.
<< <i>“The problem with rentals is cash flows out as fast as it flows in.”
“At today's prices, anyone holding RESIDENTIAL income rentals is either a fool or someone really hard up for conversation at parties.”
O.K. Guys please note what I said, “Unless you live in a crazy bubble area, put your money in some local real property that has real cash flow.”
The key word here is bubble, so no, real property will not work if you live in an area that the prices have increased 100% the last couple of years.
What I am saying here is stop gambling, and start investing, back to basics.
In my area in Texas you can still buy a nice small 3 bedroom one and one half bath for around $125,00.
The rent on these is currently about $1,300 per month.
I know a bunch of folks that lost $250,000 in the stock market crash that have never recovered; it’s been 6 years.
Forgetting that houses were even cheaper 6 years ago, lets take the $250,000 and buy two houses and pay cash.
The rent is $2,600 per month for the two, so $31,200 per year and $187,200 in six years.
Take 10% for maintenance so minus $18,700, tale off $400 per month for real property taxes and Ins. for 6six years = $28,800. Total of $47,500.
$187,200 minus $47,500 = $139,700
Lets say there is no vacancy, no appreciation, no tax write off’s for depreciation, no income tax, since all of these things would equal out.
You have to ask yourself if six years ago it would have been better to have pulled your $250,000 out of the stock market and bought these two rent houses.
Today you would still have your $250,000 equity plus the $139,700 in rent for a total of $389,700
Please remember two important things, inflation drives appreciation in housing, and there is NO national real-estate market to crash. Yes over heated markets with absurd price increases may drop in isolated areas, but while some markets are dropping most are still stable. >>
http://money.cnn.com/2005/10/21/news/newsmakers/barrack/index.htm?cnn=yes
Actually inflation drives interest rates that hurt housing and with the huge run up on housing I wouldn't want to bet against it.
<< <i>Investors have been hoping the new Fed chief would be less hawkish than Greenspan on inflation and keeps interest rates lower to spur the economy, but analysts say Bernanke will probably stay with the central bank's rate-tightening campaign.
>>
Good thing we replaced that "hawk" with one who's not so tough on inflation control
Be sure to look up whenever you hear a helicopter go by.
roadrunner
Actually most of this year was a good time to be buying. For the most part no one cared. Things changed quickly in 6 weeks.
roadrunner
The Cost of Gold | 30 Tons an Ounce: Behind Gold's Glitter: Torn Lands and Pointed Questions
I have this article saved in case the link does not work. PM me if you need to see this article as I do not believe I am permitted to reproduce this article without permission from the NY Times.