this is what happened in silver, the push last night was a direct long positions and, wile many of us have bailed to take profit. big money has a long way to go to cover there bigger losses in silver this year. some sell short today for technical reasons and lock in more profits or, just to drive down the price to cover some of there contacts. There initial short losses and obligations still must repaid . if you sold your silver than you got suckered, unless it was to take profit then cudoes to you.. do you fear to jump back in? selling short will continue for the coming months, accumulating long wile nobody notices. buying back there short contracts in the process. expect china and India to continue buying. smart Americans like you and I will keep buying. the ship has yet to sail boys! no sellers means no silver...... if im right tomorrow will have silver back above $9.00
brokers funds mostly based on overbought condition. but the people who will do the most munipulation in the next few months are not industrial, although they can buy lower than spot because of there buying power. the shorts that will continue buying are indeed the the dealers added 30 million net paper ounces short While it's true that the tech funds who currently populate the long side of COMEX silver are subject to sell at certain price points that can cause a temporary price decline.. COMEX naked short position has grown more extreme and manipulative. The COT report, for positions held as of March 3, shows the total commercial net short position has grown to a new record of over 488 million ounces Please remember, it has yet to be decided if the silver ETF will be approved or rejected. But that determination is suddenly of secondary concern. What is of primary concern is the actual debate and publicity that this issue has garnered. Out of nowhere, the main topic of discussion is the Silver Users Association and the silver ETF What remains to be seen is whether the sudden attention on the SUA results in my long held dream and goal, namely, the discrediting and demise of this corrupt organization. There is no place in a legal and free market environment for collusion among the largest industrial consumers to influence price. I am hopeful that this ultra-rare spotlight on the SUA causes people to wake-up and recognize the true nature of these manipulators. The real issue is not whether the silver ETF gets approved, but rather if the SUA is allowed to continue to exist.
part of this essay was written by silver analyst Theodore Butler
what will become of Barclays Global Investors? be prepared for lift off.
Here's a scenario I heard from someone that has dealt in coins and gold for over 30 years. His opinion is, that gold is linked to the price of oil. One of the reasons we see gold on the increase is that the middleast oil countries receive some of their oil revenues in the form of gold transfers into their accounts. And that the central banks or countries making this payment got tired of the oil nations getting this gold on the cheap while we are paying through the nose for this oil. In other words they want to get more bang for their buck, gold buck that is.
sorry you didnt understand everything i had posted.
THERE IS ALWAYS TWO SIDEDS TO THE COIN!
more extreme and manipulative.....
SO TRYING TO FULLY UNDERSTAND IS POINTLESS.
Rather im just trying to say for many years silver has been manipulated to extremes..
i speculate that in the near future it will continue. who will become the superman and put an end to it? you and i can help buy not selling.
many spent a life time trying to understand and help others in the process..
what i know is that a price drop of 75 cents shouldnt happen in one day. (unless some one is trying to make a large purchase...) dealers will deflate the price to make more profits, and get the sale of the 30 million oz that they shorted cheaper...
at the current price of 8.70 dealers have shaken many oz from the tree triggering stop sells by many wishing to lock in profit.
Yes, I've gathered that by reading your posts. It's OK to be a newbie, we all were at one time, but it's better if you listen and learn. I've been saying for weeks that we were due for a downturn around December 15, give or take a week for a while now. That's just an example. Others here have many important things to say here as well. Frankly, I think I'm a rookie compared to a lot of guys around here.
<< <i>what i know is that a price drop of 75 cents shouldnt happen in one day. >>
Why not? It's happened with regularity over the years. We've lost that much during the annual mid September dive for years now. I've watched it happen many a time now. Here's some more news for you. This correction isn't finished. I do think we are going to see a solid floor of $7.75 to $8.00 and we'll know what it is around December 30th. That's actually about right in keeping with the annual gains silver has made. Silver is quite volitile and not for the faint of heart if you are going to invest large sums. I told you I wouldn't pay the price you were talking about on those '64 Kennedys half rolls. Now you know why I said that. End of year sell offs are to be expected. Now you know why you got them for the price you did when nobody else even bid on them at the reserve.
I also said earlier that I believe gold will finish the year below $500. I could be wrong there. I've been wrong many times before. But I'm fairly confident it will close the year at closer to $500 than $525. We'll see $525 to $540 by the third week in January, so don't fret.
"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
Yes, I've gathered that by reading your posts. It's OK to a newbie, but it's better if you listen and learn. I've been saying for weeks that we were due for a downturn around December 15, give or take a week for a while now. Just an example. Others here have many important things to say as well. Frankly, I think I'm a rookie compared to a lot of guys around here.
I never said i was an expert.....
DO YOU EVEN TRY TO ELABORATE ON YOUR POSTS? WERE DO YOU BASE YOUR SPECULATION ON TO THE FALL OF GOLD AND PRICE DROPS ON SILVER?
I KNEW SILVER AND GOLD WOULD COME DOWN JUST AS MUCH AS THE NEXT GUY HERE.
AN OPINION IS JUST THAT...
SO IF YOU DON'T UNDERSTAND SOMETHING AND ASK ILL TRY TO ANSWER BETTER.
I DID THAT!!
so why post and tell me to shut up? regardless of my experience, AS TO HOW MUCH I GOT BURNED IN THE SILVER MARKET , IT does not effect MY OPINION, speculations i make are based upon research. Not charts about the past. I refer more to the future for insight and all commodities.
I look to the future! To the condition of the entire planet as a whole..
<< <i>Interesting. Hit a certain price and "sell out everything, then I can retire early"
question: sell everything [meaning all your precious metals] and then store your wealth in what form, to use during "retirement"?
Greenbacks? >>
I've been asked this question before. Yes, greenbacks temporarily. But it will be converted to other assets ASAP.
If I've planned to sell out at a certain point, then I've also planned my next move.
"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>Yes, I've gathered that by reading your posts. It's OK to a newbie, but it's better if you listen and learn. I've been saying for weeks that we were due for a downturn around December 15, give or take a week for a while now. Just an example. Others here have many important things to say as well. Frankly, I think I'm a rookie compared to a lot of guys around here.
I never said i was an expert.....
DO YOU EVEN TRY TO ELABORATE ON YOUR POSTS? WERE DO YOU BASE YOUR SPECULATION ON TO THE FALL OF GOLD AND PRICE DROPS ON SILVER?
I KNEW SILVER AND GOLD WOULD COME DOWN JUST AS MUCH AS THE NEXT GUY HERE.
AN OPINION IS JUST THAT...
SO IF YOU DON'T UNDERSTAND SOMETHING AND ASK ILL TRY TO ANSWER BETTER.
I DID THAT!!
so why post and tell me to shut up? regardless of my experience, AS TO HOW MUCH I GOT BURNED IN THE SILVER MARKET , IT does not effect MY OPINION, speculations i make are based upon research. Not charts about the past. I refer more to the future for insight and all commodities.
I look to the future! To the condition of the entire planet as a whole..
world wide disaters and floods and, stuff ... >>
Look, I'm sorry you are taking it so personally. I didn't tell you to shut up. I suggested you read and learn. I'm not the only one who can't figure out what you're saying. You tend to make statements of authority with seemingly nothing to back them up. There are people here who can run rings around me and I'm happy to read and learn from them. I've only suggested you do the same. You asked advice on those Kennedy halves, I gave it to you. You paid too much anyway.
If you had read my previous posts then you would know I've said repeatedly that we always see a downturn, whether it's a correction or not, there is ALWAYS a downturn around December 15th, give or take a week. I base my "predictions" if you will, on the calendar. I've said so many times. If you take the time to superimpose the calendars for the last 20+ years on one another, you will see a pattern. Same thing with mid September. I've seen a loss of 75 cents in one day in September more than once in the past and silver was nowhere near as high as it is now, so the loss was considerably higher percentage-wise. This current correction isn't over yet either. I believe it's due to end of the year profit taking, but that's just my opinion.
There are several dates throughout the year that are fairly predictable, at least they have been for several years. I've used this to my advantage many times. That's one reason I took some profit on 3,000 ounces earlier this month. I've done it before and been able to replace it shortly afterward and pocket a nice bit of change. Usually it goes back into silver or gold bullion. I've also said that when the calendar trends no longer hold up, then we may be in the final phase of this bull run.
Everyone is welcome and the more people that invest in physical bullion, the beter off we all are. Still, you would get a lot more respect if you would lay off the caps lock and read and learn a bit more. If you've gotten burned in the silver market, then obviously you are doing something wrong. The people on this thread could help you out a lot.
BTW, how do you predict "world wide disaters and floods and, stuff"?
"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
So, I'm thinking I'm good for silver at $7.50-$7.75. The camp that proposes that there is more silver paper out there than PM has me believing them. Silver could get interesting, either way it turns, because there is so much money being bet. There have to be groups of very influential people trying to protect their investment until they can take a good profit and on the other hand there are groups of people trying to get in to ride the rocket so they can make their numbers. This makes for a volitile situation so, it should be interesting. It's an oversimplification but it looks like there is gonna be what we call a pis-sin contest and we have front row seats.
My mind is on gold though...the yellow metal. It does have a magic, an allure...it is powerful. If the world banks are in gold for $230 US and someone wants to give you $540 for it, kind of a no-brainer, but the trouble would seem to be...How do you take your payment? Euros, yen, yuan, $US...realestate, corporate stock...hummmmmm, the mind reels...or do you hold out for higher gold prices? Gold could correct after profit taking or it could run like a scalded ape. I like the late December pull-back prognostication, we'll see if it happens. The last few years though, there have been rises in December and fall backs for the rest of the year but this years run and peak seem particularly strong. The wealth of individuals in India and China may not be growing logarithmically but there is a lot of money being made by common folk and they do like their gold.
Regardless, it's certainly fun to watch metals even if you are only a small player. So, here's to a great ride but don't bet the farm! If someone here knows what's going to happen, tell me who won the world series next year...I need to know.
ask me a specific question regarding this forum and ill do my best to answer. i am a sheep in a hoboes clothing. ( i am a new shooter in metals) I did due diligence prior to buying. started in February of 2005. at 6.80 level. no i didn't loose money on silver because. my plan is 2 to 5 years. i know many of the old timers did loose there shirts. but this is a brand new world, i see it every day by talking with people.. what freedom of speach? it is apparent to me that the long time price manipulation will come to a sudden end for the silver market, breathing a sigh of relief for many. what happens when you see a continued 5 year bull run on silver? will you jump in at 20 dollars?
thanks for helping me out on the kennedys. i did buy at 70 dollars a roll but some one else helped me make up my mind. he said with silver going higher , its not that bad of a deal if you realy want them. i agree! I jumped at the chance to own add some more gem bu rolls to my stash..
My "due diligence" in PM's has been reading ten thousand pages of articles for the past 3 years...and of course watching the markets.'' And for all that, I haven't bought all that much gold or silver bullion either.
I would not expect silver back to $9.00 tomorrow or anytime real soon. But you never can tell.
even though i was wrong about seeing a spike today, fact is it should have spiked! looking forward in the near future it is the same. continued manipulation and price breaks for the rich. (stop sells are allowing shorts to cut there losses,) the problem still is the dealer short position. expect a sudden spike above nine dollars when all the backlog transactions are entered in the books. pat them on the back for stealing your money again >>
The current COTs indicate no basic change in the extreme readings in gold and silver. The tech funds are very long and the dealers are very short. The outcome is still very much unresolved. It is true that the dealers are sitting on significant losses ..
For many weeks we have been at these extreme COT readings, but the passage of time, alone, does not bring about a resolution. Only actual close-outs of positions brings resolution...
More importantly, I hope everyone recognizes that it is the paper short position on the COMEX that is the prime force in artificially depressing the price of silver. Without this paper silver short position, the price of silver would be many times the current price. Even after the big December options expiration and a full week of deliveries, the gross short position (futures and calls) on the COMEX is still over 800 million ounces..
The question is how will we get to a reasonable relative short position in COMEX silver; will the dealers panic to the upside, or will they first shake the tech funds out in a sell-off and refuse to short at that point? This is what is unknowable. But there could be an accident to the upside, as recent events suggest.
i love this guy. basically i said this yesterday. I'm not patting myself on the back, instead i realize I'm not that far off... looks like ch** is hitting the fan every were around the world... if you read the rest of the story you can see some of the simularitys. It tells me I'm not very far off with my posts..
Feb gold continues yesterday's slide. The most active contract is off $8.10 to $516.20 (range is 513.90 to 520.90). The selling in gold is being largely attributed to the Tokyo Commodity Exchange temporarily raising trading margins for gold contracts as a means to curb speculation.
March silver is off 11 cents to $8.475 an ounce (range is $8.45 to $8.615). Barclays was out late yesterday saying silver could hit $11 next year and could be the precious metal that gets the next rally based on historical charts of past precious metal moves.
I think we will see higher gold, into the $700 range in 2006... history seems to show that when you have a major rally like this, you only reach the peak and have a decline when prices are painfully too high (like we've seen in the housing bubble in many cities). I remember looking at housing in Boston in 2002 and thinking "man, what a crazy bubble..." - and it just kept going higher. A lot higher.
Right now there is a mania for gold, and I have a feeling prices will keep rising. Bull markets have their own crazy internal logic. In this case, a lot of what's driving this is the massive deficits, which often portend inflation -- the enemy of paper currencies. With the weak US dollar, it seems unlikely we will see $300 gold any time soon - likelier we will see even higher gold and silver prices.
The massive US trade deficit - the newspapers today say $718 billion for 2005, an all time record - is going to keep seriously undermining the dollar against countries that have free floating currencies (the EU, Canada, etc.). Where this will all end is unclear, but my feeling is that we'll see a collapse in the dollar and considerably higher dollar prices for commodities like gold.
Just my 2 cents.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>The massive US trade deficit - the newspapers today say $718 billion for 2005, an all time record - is going to keep seriously undermining the dollar against countries that have free floating currencies (the EU, Canada, etc.). Where this will all end is unclear, but my feeling is that we'll see a collapse in the dollar and considerably higher dollar prices for commodities like gold. >>
Trade deficit have no inflationary impact - debt does, but whether this debt is used to buy foreign or US goods is irrelevant.
"The greatest productive force is human selfishness." Robert A. Heinlein
Trade deficit have no inflationary impact - debt does, but whether this debt is used to buy foreign or US goods is irrelevant.
Not sure I understand the distinction... trade deficits are a type of debt. The money foreign countries rack up in trade surpluses with the US is largely used to buy US government treasury bonds, which are a type of debt, and to buy other US assets.
Moreover, as the spread between imports and exports widens, the natural inclination of the dollar is to fall, thus making imports more expensive to US consumers - which is inflationary.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
No, trade deficits are not types of debt. You can buy Chinese goods using your current cash balance, and that would do *nothing* to weaken the dollar. On the other hand you can buy *US-made* goods using your credit card, and that would weaken the dollar, exactly to the same extent than if those goods had been produced abroad.
The money China and others gain from selling to US customers would be used for investments in US companies (which is a *very good* thing, as it reduces the cost of improving productivity in the US) if only the US government stopped issuing so much debt.
Debt and trade deficits do not have to go hand in hand. You could suddenly impose tarriffs and trade barriers, and the US would have just as much debt.
Your statement that "as the spread between imports and exports widens, the natural inclination of the dollar is to fall" is wrong. In a healthy monetary policy, this large spread would translate into just as large investment in US companies, which would strengthen our productivity and economic growth, and therefore the dollar.
It is debt, not trade deficit, that weakens the dollar, and "fixing" the trade deficit will do *nothing* to strengthen the dollar.
"The greatest productive force is human selfishness." Robert A. Heinlein
<< <i>No, trade deficits are not types of debt. You can buy Chinese goods using your current cash balance, and that would do *nothing* to weaken the dollar. On the other hand you can buy *US-made* goods using your credit card, and that would weaken the dollar, exactly to the same extent than if those goods had been produced abroad.
The money China and others gain from selling to US customers would be used for investments in US companies (which is a *very good* thing, as it reduces the cost of improving productivity in the US) if only the US government stopped issuing so much debt.
Debt and trade deficits do not have to go hand in hand. You could suddenly impose tarriffs and trade barriers, and the US would have just as much debt.
Your statement that "as the spread between imports and exports widens, the natural inclination of the dollar is to fall" is wrong. In a healthy monetary policy, this large spread would translate into just as large investment in US companies, which would strengthen our productivity and economic growth, and therefore the dollar.
It is debt, not trade deficit, that weakens the dollar, and "fixing" the trade deficit will do *nothing* to strengthen the dollar. >>
Alright JDelage, time for an Economics rumble
Mathematically, a trade deficit must be balanced by some other inflow of capital into the US. The inflow of capital by our trading partners is being used primarily for the purchase of US government bonds by countries seeking to keep their currency weak against the dollar (China and Japan are the prime examples.) A trade deficit is a type of "debt" in the same sense that taking out a home equity loan (to finance consumption) is debt -- you are giving the other party an equity interest in your assets, and you are used the money to buy whatever.
Over the long run, trade deficits result in foreign ownership of massive amounts of US assets -- not really any different than using your home equity line to pay for consumption, and then having the bank own a large share of your house.
When you say China would use its surpluses for "investment" in US companies, what that really involves is ownership of US companies -- they sell us cheap tvs and other junk, and buy our assets, including US companies (and their intellectual property, product lines, etc.). Doesn't sound like such a hot idea to me in the long run.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
<< <i>Over the long run, trade deficits result in foreign ownership of massive amounts of US assets -- not really any different than using your home equity line to pay for consumption, and then having the bank own a large share of your house. >>
This is completely misleading. Foreign government ownership of US assets is very, very small. It has nothing to do with a bank owning your house. Of course, it would be bad if China owned, say, 25% of US companies and lands - but we're not ever going to get anywhere close to this. This is exactly the same fears that were voiced 15 years ago about Japan. Also, there are major differences between (1) a mortgage which gives a claim to an asset, (2) a corporate bond that serves to finance US investments but gives *no* claim to US assets (this is a **good** thing), and (3) consumer or government debt which is used by the US government as an alternative to printing money (this is a **bad** thing).
<< <i>When you say China would use its surpluses for "investment" in US companies, what that really involves is ownership of US companies -- they sell us cheap tvs and other junk, and buy our assets, including US companies (and their intellectual property, product lines, etc.). Doesn't sound like such a hot idea to me in the long run. >>
You are talking about equity investment, not debt (debt gives no claim on assets, intellectual or others). Are you suggesting China is buying corporate America? That's a tall claim to make - can you back it up? Their equity investment in the US is not material.
"The greatest productive force is human selfishness." Robert A. Heinlein
I'm not so much concerned about purchases by the Chinese as such - though they purchased IBM's PC business, and tried to acquire one of the smaller oil companies. You seem to be arguing as if all the money we are sending abroad somehow ends up in a sock somewhere doesn't affect our asset ownership levels.
Let's say for the sake of argument that total US assets owned by everyone in this country (including foreigners) are $70 trillion. A trade deficit of $718 billion in one year is about 1% of the total. That's not a ridiculous amount, but in 10 years it's 10%. (I agree that overall assets will rise over time - but deficits may also rise at the same or even larger rate.)
To put it in perspective, for $718 billion, you could buy 100% of all of the following companies and still have billlions of dollars left over:
Microsoft (mkt. cap of $290 billion) Coca-Cola (mkt. cap of $98 billion) IBM (mkt. cap of $130 billion) Johnson & Johnson (mkt. cap of $180 billion) Ford (mkt. cap of $15 billion)
And that's just this year.
Of course, foreign asset purchases are usually more dispersed. But the overall effect is the same in dollars. That is a lot of US assets being sold every year to cover our deficits. Along with the assets often go very valuable brands, intellectual property, etc. that just can't be replicated.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
You are depicting a scenario which is completely unrealistic. You've got 10,000 times the chance of being killed in your car today than for that to happen.
First, US' annual GDP is around 12 trillions, growing at 3%+ a year. I don't know what is the increase to total US assets, but I suspect it's growing fast enough to keep the trade deficit to an immaterial amount (yes, 1% is immaterial).
Second, China is only 1 of our trade partners (accounted for 14% in 2004 vs 17% for Canada).
Third, Chinese companies puts most of their USD's in governmental bonds, much less in corp bonds or stock.
Fourth, there is not a concerted effort organized by the Chinese government. The trade deficit is with a large number of *companies*, with various goals in mind, the vast majority of whom have 0 interest in gaining some kind of strategic / military advantage in the US. Who cares if entrepreneur Chin has $20M invested in a Vanguard S&P500 mutual fund?
Fifth, there are barriers to corporate take over in the US, especially for industries with a meaningful strategic component. Many companies have a diversified ownership base which makes take overs difficult and expensive in the best of cases. (This being said, if they want to buy Ford - not easy given the way the stock is diluted - I say good ridance!)
"The greatest productive force is human selfishness." Robert A. Heinlein
As we hit peak oil production on the planet it would seem like investing in oil and gas companies would be a safe bet for the future, but will it be?
As oil and gas are looked at by governments around the world as strategically important to their national economies how many governments will nationalize not only their oil and gas reserves, but also perhaps other mineral reserves?
AP Morales to Nationalize Bolivia Oil, Gas Wednesday December 21, 3:47 pm ET
Winner of Bolivia Election Repeats Vow to Nationalize Oil and Gas, Says He'll Void Some Contracts LA PAZ, Bolivia (AP) -- The winner of Bolivia's presidential elections has repeated his vow to nationalize oil and gas and said he will void at least some contracts held by foreign companies "looting" the poor Andean nation's natural resources.
Bolivia's proven and potential reserves total 48.7 trillion cubic feet of natural gas, second only to Venezuela in South America, according to the U.S. Department of Energy's Energy Information Administration.
The top investors in Bolivia are Petroleo Brasileiro SA, known as Petrobras, Spain's Repsol YPF, France's Total SA, British Gas and BP PLC .
Forget about the terrorists, if our enemies want to bring America to its knees just cut off the oil! So what happens if the Arabs and the Russians, and the kooks in S. America get together and cut off our oil supply?
O.K. so we did not use our technology to build hydrogen, or other types of vehicles, because it would bankrupt our car companies, well they are bankrupt now, so how long are we going to be blackmailed by these oil countries.
If anyone has a link to the President send an email and lets have a new Trillion dollar effort to rebuild our transportation system.
Yet again the communist pink’os have stopped drilling in Alaska!
O.K. we won’t Nationalize but we are going to tax it to the limits!
Wednesday December 21, 3:39 pm ET
Venezuela to Ask Congress to Raise Income Tax Rate for Foreign Companies Operating in Orinoco CARACAS, Venezuela (AP) -- Venezuela's oil ministry will ask congress next year to increase the income tax rate for foreign companies operating in the country's Orinoco belt, Oil Minister Rafael Ramirez said Wednesday.
Ramirez has said previously that Venezuela plans to hike income taxes from 34 percent to 50 percent on four heavy-oil projects in Venezuela's Orinoco river basin.
An income tax hike would affect oil majors Exxon Mobil Corp., Chevron Corp., BP PLC, ConocoPhillips, France's Total and Norway's Statoil which hold stakes in Orinoco ventures. The projects collectively pump around 600,000 barrels a day of tar oil -- converted into synthetic crude at special upgrading facilities -- accounting for around a fifth of Venezuela's total oil production.
<< <i>As we hit peak oil production on the planet it would seem like investing in oil and gas companies would be a safe bet for the future, but will it be?
As oil and gas are looked at by governments around the world as strategically important to their national economies how many governments will nationalize not only their oil and gas reserves, but also perhaps other mineral reserves? >>
I happen to believe peak oil is a scam. One in which the environmentalists have become unwitting pawns of the very people they claim to despise. The notion of "fossil fuel" is a 200 year old myth that only the people in the US seem to still believe.
Having said that, there is little question that the growing need for petroleum in the world certainly makes for a very strong short term investment.
Nuclear energy is the obvious way to go. It's safe, it's much cheaper, it's virtually limitless and it's environmentally friendly. How ironic that only the French seem to realize this.
"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
Deadhorse Nukes are a good move for electric but what about these?
This is a list of some of the products made from oil. Nearly everything in our lives is made from oil, made by machinery and systems dependent on oil, and transported by oil as either gas or diesel fuel.
<< <i>Deadhorse Nukes are a good move for electric but what about these?
This is a list of some of the products made from oil. Nearly everything in our lives is made from oil, made by machinery and systems dependent on oil, and transported by oil as either gas or diesel fuel.
Products Made From Oil...... >>
Oh I'm not disagreeing with you. Though many, but not all, of those things could be made from other types of oil, non petroleum oil. I just don't buy into the peak oil scam. Oil is not a fossil fuel and it is constantly being produced by the planet. The fact that there is even any sort of shortage is the real scam.
Still, that doesn't keep it from being a good short term investment.
The irony of it all is the enviro-whackos who are unwittingly aiding the oil companies. Those folks are also the reason we don't have nuclear power plants all over the US. Costs would go down, oil/petroleum/gas usage would be sharply cut as would gasoline prices. We can't build refineries, we can't drill for existing oil and we can't build Nuclear power plants!! In some states we can't even build conventional power plants thanks to these nutballs. What an upside down bit of madness this is. The inmates really are running the asylum.
"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
Interesting strength on the gold stocks the past few days. The unhedged HUI index now at 272, the highest all year, and probably higher than its been in years. Same for the XAU. Don't the gold stocks know that gold just finished falling $50 in price!
This is a good signal for gold as the physical price often follows strength in the mining stocks.
<< <i>Interesting strength on the gold stocks the past few days. The unhedged HUI index now at 272, the highest all year, and probably higher than its been in years. Same for the XAU. Don't the gold stocks know that gold just finished falling $50 in price!
This is a good signal for gold as the physical price often follows strength in the mining stocks.
roadrunner >>
The junior miners still lagging a bit. Wondering when they're gonna play catch up.
An excerpt from McHugh's Safehaven article this week. Link listed below, scary stuff:
So what about M-3 the past week? The latest figures show that on a seasonally adjusted basis, M-3 rose 27.3 billion last week, a 14.0 percent annualized clip, and is up $76 billion over the past month, a 9.8 percent growth rate. But those are the massaged numbers. For the raw figures, fasten your seat belt. Are you ready? M-3 was increased $58.7 billion last week (that does not include the huge Repo infusions noted above), a 30.0 percent annualized rate of growth. For the past two week, the Fed added $93.5 billion to the money supply, a 24.0 percent annual clip. Over the past 6 weeks it is up $192.9 billion, a 16.7 percent Banana Republic hyperinflationary pace. This is nuts, folks - unless there is an incredible risk out there we are not being told about. That is a lot of money for the Plunge Protection Team's arsenal to buy markets - stocks, bonds, currencies, whatever. This level of irresponsible money supply growth makes shorting markets hazardous, yet at the same time says markets are at huge risk of declining. Maybe M-3 growth doesn't stop the decline this time. Should be a fascinating storm in 2006.
In any case this extra few BILLION will be a boost for stocks, real estate, and commodities. The author also noted that the recent $80 move in gold commenced as soon as the FED said they would hide M3 data in March. From the above, it looks like they have a good reason to hide it. Good article.
It is still my opinion that we will eventually see the collapse of the current Federal reserve notes, and be issued new U.S. Treasury notes in their place. I read this morning that a few others feel as I do that the Fed. Is being set up to take the blame, but where does that leave the rest of us?
December 23, 2005 The Fed's Turn to Fail by Steven Lachance
After decades of exponential debt growth, the Fed now faces an impossible task: keep debt growth above interest charges or risk liquidation by the marginal debtor setting off cascading cross-defaults. Annual interest charges on outstanding debt of $40 trillion currently total around $2 trillion.
Those projecting a replay of the 1970s in US financial markets should bear in mind that today's bond market is not only many times larger than it was then, there are now more than $100 trillion in contracts that derive their value from it
Foreigners, who own half of all outstanding Treasuries, could not be coerced into accepting the uncompensated losses in a devalued dollar. Their exit from the Treasury market would make borrowing prohibitively expensive, putting the government in a position where it can neither tax nor borrow effectively. At this point, the Fed's usefulness would be in serious doubt and confidence in the notes backed by its balance sheet in tatters
Alan Greenspan and others with an appreciation of monetary tradition might assume that falling confidence in FRNs would be arrested at some point by the Fed's 9,000 ton gold holding. Wishful thinking. Not only is it uncertain how much gold remains since it has not been audited for some 40 years, it is actually owned by the Treasury, not the Fed. With the Fed unable to adequately finance the Treasury, the government may rescind the Fed's authority over the US gold reserve, thereby removing the final prop supporting confidence in its notes.
A discredited Fed, with Dr Bernanke at its head, would provide the required receptacle to place the blame for the failure of the monetary system and clear the way for the issuance of a new currency. While those with unquestioned faith in modern central banking may find this outrageous, history reminds us that it is an all too familiar story, even in the US, where the Fed itself was preceded by two failed central banks, both called the Bank of the United States. If we learn anything from history, it is that we do not learn from history.
Man, you guys are scaring me! After all.... it is Christmas Eve day!!
Goldsaint, if in fact the Federal Reserve system would default, and a new currency ended up being issued.... where does that leave us? What would be the best areas to be in.... stocks, fixed accounts, bullion, real estate? What would best preserve ones assets?
Bullion, some real estate, oil and other physical assets should hold up ok. Any number of strong foreign currencies (whose country is not loaded down with US debt) would be other alternatives (Cando, Swiss, Rand, etc.). Paper-denominated assets esp. those with interest rate risks would be the hardest hit. That means many US stocks. Mortgages as well.
One thing for sure gold, silver (PM's). diamonds, gems, etc would be the safest imo with foreign currencies right there as well. Since this shock would affect all major nations there will be few areas to hide in. Of course this all assumes that gold is not confiscated from US citizens once again. Having part of one's gold overseas would be a thought...if you could find a safe deposit box not likely to be confiscated. Last I read even the Swiss Banks don't want us maintaining secret accounts there any longer. Strategic metals like Palladium, Platinum might be a good alternative as well since those would likely not be confiscated ever.
Recall when FDR confiscated gold in 1933 and effectively devalued the US dollar by about 40% overnight. What a guy. It then took 35 US dollars to buy an ounce of gold rather than 20.67 US dollars. Wholesale prices increased a similar amount at the same time.
What would be the affect on rare coin holdings in FRN's were replaced with Treasury Notes? There would likely be an immediate devaluation as part of this maneuver. Would rare coins effectively maintain their value or would they also be "devalued?" All of a sudden would every dealer in the country be asking 40% more in Treasury Notes for their coins? And if so, would collectors want to eat that 40% loss? I doubt it. Most would likely stop collecting at the time. There would have to be a meeting of the sellers and buyers somewhere in between. If the collectors aren't buying, the prices will fall, and dealers would have to adjust. It would not be pretty. An interesting aside that would be good to discuss.
My two cents worth on Gold being confiscated is that rarer gold or even common slabbed gold would NOT be confiscated.
I would not want to be holding common date, lesser grade, uncertified gold, but I think with the size of the community that the out cries and law suits would deter confiscation of most good material. After all if the Gov. is looking for raw bullion to back currency the weight of what they would get would not be worth the years of hassle, to say nothing of creating and underground coin exchange.
I can just imagine some of the big money boys giving up their million dollar gold coins, and if they exempt theirs, they will have to exempt ours.
Currently even the modern gold I buy I want slabbed with an expert opinion of grade. This makes it pretty easy to make the case that it is a collection and not an accumulation.
As for other coins I agree with RR, but I think it would be easy to imagine that rarer coins might move up 10 to 15 percent all at once. In addition there is always a great deal of distrust even when the new money comes out.
I would imagine silver may be a good area to be in. It would be unrealistic for the government to attempt to confiscate silver.... way too much of it as compared to gold. Also, the plantinum and other noble metals to some extent (although some of these have been tied to economic condition and thus their demand. That does appear to be slowly changing).
I do hate to think about what would happen to my 401K plan.... since I only have limited things that I can invest in within the plan. Although... it does have a couple of foreign investment accounts.... perhaps time to increase allocations in the foreign accounts!!
When gold was confiscated in the 1930's numismatic and rare gold was exempt. I do not know what the criteria was but rest assured your proof Liberty gold, hi reliefs, rare dates, and gem Saints in MS65 and higher would be exempt. The govt also allowed a $100 exemption to all families at that time. In today's gold that would be 5 ounces of gold or $2500. 99% of all households don't even own that much. I'm sure Bill Gates, Alan Greenspan, Donald Trump, and Warren Buffet to name but a few, have considerably more.
Here's another interesting similarity to the risk taking and gambling of our modern society and that of late 18th century France during the French Revolution. Very striking and one I had not noted before.
Take from Chris Waltzek's www.financialsense.com article. Link is below:
Even worse than this was the breaking down of the morals of the country at large... from the gambling, speculative spirit... From this was developed an even more disgraceful result,--the decay of a true sense of national good faith..." from: Fiat Money Inflation In France.
Similarly, each year millions of Americans enjoy recreational gambling. More than two hundred years have elapsed since the French gambling episode. Yet domestic speculative fever is emerging in a new continent. Scratch and win tickets, lotto, as well as various games of chance are available in most communities. As mountains of inflated currency course through the nations commercial arteries, Internet gambling provides anyone with access to the World Wide Web and a credit card the ability to risk paper capital at a moments notice:
" Says the most brilliant of apologists for French revolutionary statesmanship, "Commerce was dead; betting took its place." from: Fiat Money Inflation In France.
Moreover, prosperous economic and political conditions mask the underlying costs associated with speculation and gaming. For instance, the stock market boom from 1980-2000 created incredible economic growth. The ensuing prosperity marginalized the damaging affects of gambling. In fact, one may argue that the satisfaction gained from occasional gambling is worth the invariable losses incurred.
"The French are naturally thrifty; but, with such masses of money and with such uncertainty as to its future value, the ordinary motives for saving and care diminished, And a loose luxury spread throughout the country. A still worse outgrowth was the increase of speculation and gambling..." from: Fiat Money Inflation In France.
From poker on TV at every hour of the day, to Casino's, Sports Betting, stock picking, and 2nd and 3rd properties/homes, we have taken "betting" to a new zenith.
I don't believe confiscation is a serious risk; the situation is just too different now than it was 70 years ago. In general, the public is less passive now -- I certainly wouldn't turn in my gold, and I suspect that I would joined by many others -- I would also consider a court challenge to the whole concept. Given that the government has in essence been encouraging diversification into bullion for the past 20 years through the American Eagles program, confiscation would be an awkward position to support.
(On another topic, I've been following silver sales on ebay for the past few months -- it is a surprisingly efficient market -- this seems like a good means for a seller to get full value for bullion)
Comments
big money has a long way to go to cover there bigger losses in silver this year. some sell short today for technical reasons and lock in more profits or, just to drive down the price to cover some of there contacts. There initial short losses and obligations still must repaid .
if you sold your silver than you got suckered, unless it was to take profit then cudoes to you..
do you fear to jump back in? selling short will continue for the coming months, accumulating long wile nobody notices.
buying back there short contracts in the process.
expect china and India to continue buying. smart Americans like you and I will keep buying.
the ship has yet to sail boys!
no sellers means no silver......
if im right tomorrow will have silver back above $9.00
Who is the big money that you are referring to?
Knowledge is the enemy of fear
but the people who will do the most munipulation in the next few months are not industrial, although they can buy lower than spot because of there buying power. the shorts that will continue buying are indeed the the dealers added 30 million net paper ounces short
While it's true that the tech funds who currently populate the long side of COMEX silver are subject to sell at certain price points that can cause a temporary price decline..
COMEX naked short position has grown more extreme and manipulative. The COT report, for positions held as of March 3, shows the total commercial net short position has grown to a new record of over 488 million ounces
Please remember, it has yet to be decided if the silver ETF will be approved or rejected. But that determination is suddenly of secondary concern. What is of primary concern is the actual debate and publicity that this issue has garnered. Out of nowhere, the main topic of discussion is the Silver Users Association and the silver ETF
What remains to be seen is whether the sudden attention on the SUA results in my long held dream and goal, namely, the discrediting and demise of this corrupt organization. There is no place in a legal and free market environment for collusion among the largest industrial consumers to influence price. I am hopeful that this ultra-rare spotlight on the SUA causes people to wake-up and recognize the true nature of these manipulators. The real issue is not whether the silver ETF gets approved, but rather if the SUA is allowed to continue to exist.
part of this essay was written by silver analyst Theodore Butler
what will become of Barclays Global Investors?
be prepared for lift off.
to the price of oil. One of the reasons we see gold on the increase is that the middleast oil countries receive some of their oil revenues in the form of gold transfers into their accounts.
And that the central banks or countries making this payment got tired of the oil nations getting this gold on the cheap while we are paying through the nose for this oil. In other words they want to get more bang for their buck, gold buck that is.
I have tried to understand your last 2 posts but I find too many contrary statements.
Knowledge is the enemy of fear
THERE IS ALWAYS TWO SIDEDS TO THE COIN!
more extreme and manipulative.....
SO TRYING TO FULLY UNDERSTAND IS POINTLESS.
Rather im just trying to say for many years silver has been
manipulated to extremes..
i speculate that in the near future it will continue.
who will become the superman and put an end to it?
you and i can help buy not selling.
many spent a life time trying to understand and help others in the process..
what i know is that a price drop of 75 cents shouldnt happen in one day. (unless some one is trying to make a large purchase...)
dealers will deflate the price to make more profits, and get the sale of the 30 million oz that they shorted cheaper...
at the current price of 8.70 dealers have shaken many oz from the tree triggering stop sells by many wishing to lock in profit.
<< <i>THERE IS ALWAYS TWO SIDEDS TO THE COIN!
more extreme and manipulative.....
SO TRYING TO FULLY UNDERSTAND IS POINTLESS. >>
Yes, I've gathered that by reading your posts. It's OK to be a newbie, we all were at one time, but it's better if you listen and learn. I've been saying for weeks that we were due for a downturn around December 15, give or take a week for a while now. That's just an example. Others here have many important things to say here as well. Frankly, I think I'm a rookie compared to a lot of guys around here.
<< <i>what i know is that a price drop of 75 cents shouldnt happen in one day. >>
Why not? It's happened with regularity over the years. We've lost that much during the annual mid September dive for years now. I've watched it happen many a time now. Here's some more news for you. This correction isn't finished. I do think we are going to see a solid floor of $7.75 to $8.00 and we'll know what it is around December 30th. That's actually about right in keeping with the annual gains silver has made. Silver is quite volitile and not for the faint of heart if you are going to invest large sums. I told you I wouldn't pay the price you were talking about on those '64 Kennedys half rolls. Now you know why I said that. End of year sell offs are to be expected. Now you know why you got them for the price you did when nobody else even bid on them at the reserve.
I also said earlier that I believe gold will finish the year below $500. I could be wrong there. I've been wrong many times before. But I'm fairly confident it will close the year at closer to $500 than $525. We'll see $525 to $540 by the third week in January, so don't fret.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
I never said i was an expert.....
DO YOU EVEN TRY TO ELABORATE ON YOUR POSTS?
WERE DO YOU BASE YOUR SPECULATION ON TO THE FALL OF GOLD AND PRICE DROPS ON SILVER?
I KNEW SILVER AND GOLD WOULD COME DOWN JUST AS MUCH AS THE NEXT GUY HERE.
AN OPINION IS JUST THAT...
SO IF YOU DON'T UNDERSTAND SOMETHING AND ASK ILL TRY TO ANSWER BETTER.
I DID THAT!!
so why post and tell me to shut up?
regardless of my experience, AS TO HOW MUCH I GOT BURNED IN THE SILVER MARKET , IT does not effect MY OPINION, speculations i make are based upon research. Not charts about the past. I refer more to the future for insight and all commodities.
I look to the future! To the condition of the entire planet as a whole..
world wide disaters and floods and, stuff ...
That's a good way to end up taking Risk that's not compensated with Reward.
<< <i>Interesting. Hit a certain price and "sell out everything, then I can retire early"
question: sell everything [meaning all your precious metals] and then store your wealth in what form, to use during "retirement"?
Greenbacks?
I've been asked this question before. Yes, greenbacks temporarily. But it will be converted to other assets ASAP.
If I've planned to sell out at a certain point, then I've also planned my next move.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>Yes, I've gathered that by reading your posts. It's OK to a newbie, but it's better if you listen and learn. I've been saying for weeks that we were due for a downturn around December 15, give or take a week for a while now. Just an example. Others here have many important things to say as well. Frankly, I think I'm a rookie compared to a lot of guys around here.
I never said i was an expert.....
DO YOU EVEN TRY TO ELABORATE ON YOUR POSTS?
WERE DO YOU BASE YOUR SPECULATION ON TO THE FALL OF GOLD AND PRICE DROPS ON SILVER?
I KNEW SILVER AND GOLD WOULD COME DOWN JUST AS MUCH AS THE NEXT GUY HERE.
AN OPINION IS JUST THAT...
SO IF YOU DON'T UNDERSTAND SOMETHING AND ASK ILL TRY TO ANSWER BETTER.
I DID THAT!!
so why post and tell me to shut up?
regardless of my experience, AS TO HOW MUCH I GOT BURNED IN THE SILVER MARKET , IT does not effect MY OPINION, speculations i make are based upon research. Not charts about the past. I refer more to the future for insight and all commodities.
I look to the future! To the condition of the entire planet as a whole..
world wide disaters and floods and, stuff ... >>
Look, I'm sorry you are taking it so personally. I didn't tell you to shut up. I suggested you read and learn. I'm not the only one who can't figure out what you're saying. You tend to make statements of authority with seemingly nothing to back them up. There are people here who can run rings around me and I'm happy to read and learn from them. I've only suggested you do the same. You asked advice on those Kennedy halves, I gave it to you. You paid too much anyway.
If you had read my previous posts then you would know I've said repeatedly that we always see a downturn, whether it's a correction or not, there is ALWAYS a downturn around December 15th, give or take a week. I base my "predictions" if you will, on the calendar. I've said so many times. If you take the time to superimpose the calendars for the last 20+ years on one another, you will see a pattern. Same thing with mid September. I've seen a loss of 75 cents in one day in September more than once in the past and silver was nowhere near as high as it is now, so the loss was considerably higher percentage-wise. This current correction isn't over yet either. I believe it's due to end of the year profit taking, but that's just my opinion.
There are several dates throughout the year that are fairly predictable, at least they have been for several years. I've used this to my advantage many times. That's one reason I took some profit on 3,000 ounces earlier this month. I've done it before and been able to replace it shortly afterward and pocket a nice bit of change. Usually it goes back into silver or gold bullion. I've also said that when the calendar trends no longer hold up, then we may be in the final phase of this bull run.
Everyone is welcome and the more people that invest in physical bullion, the beter off we all are. Still, you would get a lot more respect if you would lay off the caps lock and read and learn a bit more. If you've gotten burned in the silver market, then obviously you are doing something wrong. The people on this thread could help you out a lot.
BTW, how do you predict "world wide disaters and floods and, stuff"?
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
My mind is on gold though...the yellow metal. It does have a magic, an allure...it is powerful. If the world banks are in gold for $230 US and someone wants to give you $540 for it, kind of a no-brainer, but the trouble would seem to be...How do you take your payment? Euros, yen, yuan, $US...realestate, corporate stock...hummmmmm, the mind reels...or do you hold out for higher gold prices? Gold could correct after profit taking or it could run like a scalded ape. I like the late December pull-back prognostication, we'll see if it happens. The last few years though, there have been rises in December and fall backs for the rest of the year but this years run and peak seem particularly strong. The wealth of individuals in India and China may not be growing logarithmically but there is a lot of money being made by common folk and they do like their gold.
Regardless, it's certainly fun to watch metals even if you are only a small player. So, here's to a great ride but don't bet the farm! If someone here knows what's going to happen, tell me who won the world series next year...I need to know.
Got gold?
( i am a new shooter in metals) I did due diligence prior to buying. started in February of 2005. at 6.80 level.
no i didn't loose money on silver because. my plan is 2 to 5 years.
i know many of the old timers did loose there shirts.
but this is a brand new world, i see it every day by talking with people.. what freedom of speach?
it is apparent to me that the long time price manipulation will come to a sudden end for the silver market,
breathing a sigh of relief for many. what happens when you see a continued 5 year bull run on silver? will you jump in at 20 dollars?
thanks for helping me out on the kennedys.
i did buy at 70 dollars a roll but some one else helped me make up my mind.
he said with silver going higher , its not that bad of a deal if you realy want them.
i agree! I jumped at the chance to own add some more gem bu rolls to my stash..
And for all that, I haven't bought all that much gold or silver bullion either.
I would not expect silver back to $9.00 tomorrow or anytime real soon. But you never can tell.
roadrunner
<< <i>I would not expect silver back to $9.00 tomorrow or anytime real soon. >>
Maybe you'll see 9.00 silver again sooner if I lend you my glasses.
These are special glasses. They are specially designed NOT to see any inflation.
fact is it should have spiked!
looking forward in the near future it is the same. continued manipulation and price breaks for the rich. (stop sells are allowing shorts to cut there losses,) the problem still is the dealer short position. expect a sudden spike above
nine dollars when all the backlog transactions are entered in the books.
pat them on the back for stealing your money again >>
The current COTs indicate no basic change in the extreme readings in gold and silver. The tech funds are very long and the dealers are very short. The outcome is still very much unresolved. It is true that the dealers are sitting on significant losses ..
For many weeks we have been at these extreme COT readings, but the passage of time, alone, does not bring about a resolution. Only actual close-outs of positions brings resolution...
More importantly, I hope everyone recognizes that it is the paper short position on the COMEX that is the prime force in artificially depressing the price of silver. Without this paper silver short position, the price of silver would be many times the current price. Even after the big December options expiration and a full week of deliveries, the gross short position (futures and calls) on the COMEX is still over 800 million ounces..
The question is how will we get to a reasonable relative short position in COMEX silver; will the dealers panic to the upside, or will they first shake the tech funds out in a sell-off and refuse to short at that point? This is what is unknowable. But there could be an accident to the upside, as recent events suggest.
i love this guy. basically i said this yesterday. I'm not patting myself on the back, instead i realize I'm not that far off...
looks like ch** is hitting the fan every were around the world...
if you read the rest of the story you can see some of the simularitys. It tells me I'm not very far off with my posts..
for the full story
also read todays essay...
Following TB's logic leads to taking Risk not compensated with Reward.
March silver is off 11 cents to $8.475 an ounce (range is $8.45 to $8.615). Barclays was out late yesterday saying silver could hit $11 next year and could be the precious metal that gets the next rally based on historical charts of past precious metal moves.
Knowledge is the enemy of fear
Right now there is a mania for gold, and I have a feeling prices will keep rising. Bull markets have their own crazy internal logic. In this case, a lot of what's driving this is the massive deficits, which often portend inflation -- the enemy of paper currencies. With the weak US dollar, it seems unlikely we will see $300 gold any time soon - likelier we will see even higher gold and silver prices.
The massive US trade deficit - the newspapers today say $718 billion for 2005, an all time record - is going to keep seriously undermining the dollar against countries that have free floating currencies (the EU, Canada, etc.). Where this will all end is unclear, but my feeling is that we'll see a collapse in the dollar and considerably higher dollar prices for commodities like gold.
Just my 2 cents.
<< <i>The massive US trade deficit - the newspapers today say $718 billion for 2005, an all time record - is going to keep seriously undermining the dollar against countries that have free floating currencies (the EU, Canada, etc.). Where this will all end is unclear, but my feeling is that we'll see a collapse in the dollar and considerably higher dollar prices for commodities like gold. >>
Trade deficit have no inflationary impact - debt does, but whether this debt is used to buy foreign or US goods is irrelevant.
Robert A. Heinlein
Not sure I understand the distinction... trade deficits are a type of debt. The money foreign countries rack up in trade surpluses with the US is largely used to buy US government treasury bonds, which are a type of debt, and to buy other US assets.
Moreover, as the spread between imports and exports widens, the natural inclination of the dollar is to fall, thus making imports more expensive to US consumers - which is inflationary.
The money China and others gain from selling to US customers would be used for investments in US companies (which is a *very good* thing, as it reduces the cost of improving productivity in the US) if only the US government stopped issuing so much debt.
Debt and trade deficits do not have to go hand in hand. You could suddenly impose tarriffs and trade barriers, and the US would have just as much debt.
Your statement that "as the spread between imports and exports widens, the natural inclination of the dollar is to fall" is wrong. In a healthy monetary policy, this large spread would translate into just as large investment in US companies, which would strengthen our productivity and economic growth, and therefore the dollar.
It is debt, not trade deficit, that weakens the dollar, and "fixing" the trade deficit will do *nothing* to strengthen the dollar.
Robert A. Heinlein
<< <i>No, trade deficits are not types of debt. You can buy Chinese goods using your current cash balance, and that would do *nothing* to weaken the dollar. On the other hand you can buy *US-made* goods using your credit card, and that would weaken the dollar, exactly to the same extent than if those goods had been produced abroad.
The money China and others gain from selling to US customers would be used for investments in US companies (which is a *very good* thing, as it reduces the cost of improving productivity in the US) if only the US government stopped issuing so much debt.
Debt and trade deficits do not have to go hand in hand. You could suddenly impose tarriffs and trade barriers, and the US would have just as much debt.
Your statement that "as the spread between imports and exports widens, the natural inclination of the dollar is to fall" is wrong. In a healthy monetary policy, this large spread would translate into just as large investment in US companies, which would strengthen our productivity and economic growth, and therefore the dollar.
It is debt, not trade deficit, that weakens the dollar, and "fixing" the trade deficit will do *nothing* to strengthen the dollar. >>
Alright JDelage, time for an Economics rumble
Mathematically, a trade deficit must be balanced by some other inflow of capital into the US. The inflow of capital by our trading partners is being used primarily for the purchase of US government bonds by countries seeking to keep their currency weak against the dollar (China and Japan are the prime examples.) A trade deficit is a type of "debt" in the same sense that taking out a home equity loan (to finance consumption) is debt -- you are giving the other party an equity interest in your assets, and you are used the money to buy whatever.
Over the long run, trade deficits result in foreign ownership of massive amounts of US assets -- not really any different than using your home equity line to pay for consumption, and then having the bank own a large share of your house.
When you say China would use its surpluses for "investment" in US companies, what that really involves is ownership of US companies -- they sell us cheap tvs and other junk, and buy our assets, including US companies (and their intellectual property, product lines, etc.). Doesn't sound like such a hot idea to me in the long run.
<< <i>Over the long run, trade deficits result in foreign ownership of massive amounts of US assets -- not really any different than using your home equity line to pay for consumption, and then having the bank own a large share of your house. >>
This is completely misleading. Foreign government ownership of US assets is very, very small. It has nothing to do with a bank owning your house. Of course, it would be bad if China owned, say, 25% of US companies and lands - but we're not ever going to get anywhere close to this. This is exactly the same fears that were voiced 15 years ago about Japan. Also, there are major differences between (1) a mortgage which gives a claim to an asset, (2) a corporate bond that serves to finance US investments but gives *no* claim to US assets (this is a **good** thing), and (3) consumer or government debt which is used by the US government as an alternative to printing money (this is a **bad** thing).
<< <i>When you say China would use its surpluses for "investment" in US companies, what that really involves is ownership of US companies -- they sell us cheap tvs and other junk, and buy our assets, including US companies (and their intellectual property, product lines, etc.). Doesn't sound like such a hot idea to me in the long run. >>
You are talking about equity investment, not debt (debt gives no claim on assets, intellectual or others). Are you suggesting China is buying corporate America? That's a tall claim to make - can you back it up? Their equity investment in the US is not material.
Robert A. Heinlein
They don't want the barn until the cow dies. Maybe not even then.
Keep buying at Walmart/avoid war with China.
No, wait.....we DON'T want war, do we?
Let's say for the sake of argument that total US assets owned by everyone in this country (including foreigners) are $70 trillion. A trade deficit of $718 billion in one year is about 1% of the total. That's not a ridiculous amount, but in 10 years it's 10%. (I agree that overall assets will rise over time - but deficits may also rise at the same or even larger rate.)
To put it in perspective, for $718 billion, you could buy 100% of all of the following companies and still have billlions of dollars left over:
Microsoft (mkt. cap of $290 billion)
Coca-Cola (mkt. cap of $98 billion)
IBM (mkt. cap of $130 billion)
Johnson & Johnson (mkt. cap of $180 billion)
Ford (mkt. cap of $15 billion)
And that's just this year.
Of course, foreign asset purchases are usually more dispersed. But the overall effect is the same in dollars. That is a lot of US assets being sold every year to cover our deficits. Along with the assets often go very valuable brands, intellectual property, etc. that just can't be replicated.
Knowledge is the enemy of fear
First, US' annual GDP is around 12 trillions, growing at 3%+ a year. I don't know what is the increase to total US assets, but I suspect it's growing fast enough to keep the trade deficit to an immaterial amount (yes, 1% is immaterial).
Second, China is only 1 of our trade partners (accounted for 14% in 2004 vs 17% for Canada).
Third, Chinese companies puts most of their USD's in governmental bonds, much less in corp bonds or stock.
Fourth, there is not a concerted effort organized by the Chinese government. The trade deficit is with a large number of *companies*, with various goals in mind, the vast majority of whom have 0 interest in gaining some kind of strategic / military advantage in the US. Who cares if entrepreneur Chin has $20M invested in a Vanguard S&P500 mutual fund?
Fifth, there are barriers to corporate take over in the US, especially for industries with a meaningful strategic component. Many companies have a diversified ownership base which makes take overs difficult and expensive in the best of cases. (This being said, if they want to buy Ford - not easy given the way the stock is diluted - I say good ridance!)
Robert A. Heinlein
As oil and gas are looked at by governments around the world as strategically important to their national economies how many governments will nationalize not only their oil and gas reserves, but also perhaps other mineral reserves?
AP
Morales to Nationalize Bolivia Oil, Gas
Wednesday December 21, 3:47 pm ET
Winner of Bolivia Election Repeats Vow to Nationalize Oil and Gas, Says He'll Void Some Contracts
LA PAZ, Bolivia (AP) -- The winner of Bolivia's presidential elections has repeated his vow to nationalize oil and gas and said he will void at least some contracts held by foreign companies "looting" the poor Andean nation's natural resources.
Bolivia's proven and potential reserves total 48.7 trillion cubic feet of natural gas, second only to Venezuela in South America, according to the U.S. Department of Energy's Energy Information Administration.
The top investors in Bolivia are Petroleo Brasileiro SA, known as Petrobras, Spain's Repsol YPF, France's Total SA, British Gas and BP PLC .
So what happens if the Arabs and the Russians, and the kooks in S. America get together and cut off our oil supply?
O.K. so we did not use our technology to build hydrogen, or other types of vehicles, because it would bankrupt our car companies, well they are bankrupt now, so how long are we going to be blackmailed by these oil countries.
If anyone has a link to the President send an email and lets have a new Trillion dollar effort to rebuild our transportation system.
Yet again the communist pink’os have stopped drilling in Alaska!
O.K. we won’t Nationalize but we are going to tax it to the limits!
Wednesday December 21, 3:39 pm ET
Venezuela to Ask Congress to Raise Income Tax Rate for Foreign Companies Operating in Orinoco
CARACAS, Venezuela (AP) -- Venezuela's oil ministry will ask congress next year to increase the income tax rate for foreign companies operating in the country's Orinoco belt, Oil Minister Rafael Ramirez said Wednesday.
Ramirez has said previously that Venezuela plans to hike income taxes from 34 percent to 50 percent on four heavy-oil projects in Venezuela's Orinoco river basin.
An income tax hike would affect oil majors Exxon Mobil Corp., Chevron Corp., BP PLC, ConocoPhillips, France's Total and Norway's Statoil which hold stakes in Orinoco ventures. The projects collectively pump around 600,000 barrels a day of tar oil -- converted into synthetic crude at special upgrading facilities -- accounting for around a fifth of Venezuela's total oil production.
<< <i>As we hit peak oil production on the planet it would seem like investing in oil and gas companies would be a safe bet for the future, but will it be?
As oil and gas are looked at by governments around the world as strategically important to their national economies how many governments will nationalize not only their oil and gas reserves, but also perhaps other mineral reserves? >>
I happen to believe peak oil is a scam. One in which the environmentalists have become unwitting pawns of the very people they claim to despise. The notion of "fossil fuel" is a 200 year old myth that only the people in the US seem to still believe.
Having said that, there is little question that the growing need for petroleum in the world certainly makes for a very strong short term investment.
Nuclear energy is the obvious way to go. It's safe, it's much cheaper, it's virtually limitless and it's environmentally friendly. How ironic that only the French seem to realize this.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
This is a list of some of the products made from oil. Nearly everything in our lives is made from oil, made by machinery and systems dependent on oil, and transported by oil as either gas or diesel fuel.
Products Made From Oil
Clothing InkHeart Valves CrayonsParachutesTelephonesEnamelTransparent tapeAntiseptics Vacuum bottlesDeodorantPantyhoseRubbing AlcoholCarpetsEpoxy paintOil filtersUpholsteryHearing AidsCar sound insulationCassettes Motorcycle helmetsPillowsShower doorsShoesRefrigerator linings Electrical tapeSafety glassAwningsSalad bowlRubber cementNylon ropeIce bucketsFertilizersHair coloringToilet seatsDenture adhesive LoudspeakersMovie filmFishing bootsCandlesWater pipesCar enamel Shower curtainsCredit cardsAspirinGolf ballsDetergentsSunglasses GlueFishing rodsLinoleumPlastic woodSoft contact lensesTrash bagsHand lotionShampooShaving creamFootballsPaint brushesBalloons Fan beltsUmbrellasPaint RollersLuggageAntifreeze Model cars Floor wax Sports car bodies Tires Dishwashing liquids Unbreakable dishesToothbrushesToothpasteCombsTentsHair curlers LipstickIce cube traysElectric blanketsTennis racketsDrinking cupsHouse paintRollerskates wheelsGuitar stringsAmmoniaEyeglasses Ice chestsLife jacketsTV cabinetsCar battery casesInsect repellent RefrigerantsTypewriter ribbons Cold creamGlycerin Plywood adhesiveCamerasAnestheticsArtificial turfArtificial LimbsBandagesDenturesMopsBeach UmbrellasBallpoint pensBoats Nail polishGolf bagsCaulkingTape recordersCurtainsVitamin capsules DashboardsPuttyPercolatorsSkisInsecticidesFishing luresPerfumes Shoe polishPetroleum jellyFaucet washersFood preservativesAntihistamines CortisoneDyesLP recordsSolventsRoofing
<< <i>Deadhorse Nukes are a good move for electric but what about these?
This is a list of some of the products made from oil. Nearly everything in our lives is made from oil, made by machinery and systems dependent on oil, and transported by oil as either gas or diesel fuel.
Products Made From Oil...... >>
Oh I'm not disagreeing with you. Though many, but not all, of those things could be made from other types of oil, non petroleum oil. I just don't buy into the peak oil scam. Oil is not a fossil fuel and it is constantly being produced by the planet. The fact that there is even any sort of shortage is the real scam.
Still, that doesn't keep it from being a good short term investment.
The irony of it all is the enviro-whackos who are unwittingly aiding the oil companies. Those folks are also the reason we don't have nuclear power plants all over the US. Costs would go down, oil/petroleum/gas usage would be sharply cut as would gasoline prices. We can't build refineries, we can't drill for existing oil and we can't build Nuclear power plants!! In some states we can't even build conventional power plants thanks to these nutballs. What an upside down bit of madness this is. The inmates really are running the asylum.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
is stealing , or buying technology, know how and training of its own citizens
to eventually supplant the European and American Corps in the manufacturing
of complex and high ticket products.
2. By holding huge amounts of US debt, China can use the debt as an economic weapon
by selling the US Bonds and by lowering the market price of the bonds significantly raise
the interest rate on long term debt.
3. America, by buying cheap and moderately expensive goods from China, is training and creating our own
competition that will eventually take jobs, investments and technological innovation from US shores.
When the Chinese start to corner the market in cars, aircraft, computors, toys, clothing and household appliences
the US will be in great difficulty.
4. The service sector, accounting, engineering and design, computor programing are already being performed by China, India
Pakistan and other countries.
5. High debt, huge balance of payments, loss of heavy industry, loss of intellectual developement and design
will leave the US with a huge hole in the nations ability for self sufficientcy. Other then the entertainment Industry
food production, the military and welfare, health care and nursing homes..........what other sources of earning a living will be left.
Camelot
This is a good signal for gold as the physical price often follows strength in the mining stocks.
roadrunner
<< <i>Interesting strength on the gold stocks the past few days. The unhedged HUI index now at 272, the highest all year, and probably higher than its been in years. Same for the XAU. Don't the gold stocks know that gold just finished falling $50 in price!
This is a good signal for gold as the physical price often follows strength in the mining stocks.
roadrunner >>
The junior miners still lagging a bit. Wondering when they're gonna play catch up.
So what about M-3 the past week? The latest figures show that on a seasonally adjusted basis, M-3 rose 27.3 billion last week, a 14.0 percent annualized clip, and is up $76 billion over the past month, a 9.8 percent growth rate. But those are the massaged numbers. For the raw figures, fasten your seat belt. Are you ready? M-3 was increased $58.7 billion last week (that does not include the huge Repo infusions noted above), a 30.0 percent annualized rate of growth. For the past two week, the Fed added $93.5 billion to the money supply, a 24.0 percent annual clip. Over the past 6 weeks it is up $192.9 billion, a 16.7 percent Banana Republic hyperinflationary pace. This is nuts, folks - unless there is an incredible risk out there we are not being told about. That is a lot of money for the Plunge Protection Team's arsenal to buy markets - stocks, bonds, currencies, whatever. This level of irresponsible money supply growth makes shorting markets hazardous, yet at the same time says markets are at huge risk of declining. Maybe M-3 growth doesn't stop the decline this time. Should be a fascinating storm in 2006.
In any case this extra few BILLION will be a boost for stocks, real estate, and commodities. The author also noted that the recent $80 move in gold commenced as soon as the FED said they would hide M3 data in March. From the above, it looks like they have a good reason to hide it. Good article.
What's the FED doing??
roadrunner
Tom
December 23, 2005
The Fed's Turn to Fail
by Steven Lachance
After decades of exponential debt growth, the Fed now faces an impossible task: keep debt growth above interest charges or risk liquidation by the marginal debtor setting off cascading cross-defaults. Annual interest charges on outstanding debt of $40 trillion currently total around $2 trillion.
Those projecting a replay of the 1970s in US financial markets should bear in mind that today's bond market is not only many times larger than it was then, there are now more than $100 trillion in contracts that derive their value from it
Foreigners, who own half of all outstanding Treasuries, could not be coerced into accepting the uncompensated losses in a devalued dollar. Their exit from the Treasury market would make borrowing prohibitively expensive, putting the government in a position where it can neither tax nor borrow effectively. At this point, the Fed's usefulness would be in serious doubt and confidence in the notes backed by its balance sheet in tatters
Alan Greenspan and others with an appreciation of monetary tradition might assume that falling confidence in FRNs would be arrested at some point by the Fed's 9,000 ton gold holding. Wishful thinking. Not only is it uncertain how much gold remains since it has not been audited for some 40 years, it is actually owned by the Treasury, not the Fed. With the Fed unable to adequately finance the Treasury, the government may rescind the Fed's authority over the US gold reserve, thereby removing the final prop supporting confidence in its notes.
A discredited Fed, with Dr Bernanke at its head, would provide the required receptacle to place the blame for the failure of the monetary system and clear the way for the issuance of a new currency. While those with unquestioned faith in modern central banking may find this outrageous, history reminds us that it is an all too familiar story, even in the US, where the Fed itself was preceded by two failed central banks, both called the Bank of the United States. If we learn anything from history, it is that we do not learn from history.
Goldsaint, if in fact the Federal Reserve system would default, and a new currency ended up being issued.... where does that leave us? What would be the best areas to be in.... stocks, fixed accounts, bullion, real estate? What would best preserve ones assets?
One thing for sure gold, silver (PM's). diamonds, gems, etc would be the safest imo with foreign currencies right there as well. Since this shock would affect all major nations there will be few areas to hide in. Of course this all assumes that gold is not confiscated from US citizens once again. Having part of one's gold overseas would be a thought...if you could find a safe deposit box not likely to be confiscated. Last I read even the Swiss Banks don't want us maintaining secret accounts there any longer. Strategic metals like Palladium, Platinum might be a good alternative as well since those would likely not be confiscated ever.
Recall when FDR confiscated gold in 1933 and effectively devalued the US dollar by about 40% overnight. What a guy. It then took 35 US dollars to buy an ounce of gold rather than 20.67 US dollars.
Wholesale prices increased a similar amount at the same time.
What would be the affect on rare coin holdings in FRN's were replaced with Treasury Notes? There would likely be an immediate devaluation as part of this maneuver. Would rare coins effectively maintain their value or would they also be "devalued?" All of a sudden would every dealer in the country be asking 40% more in Treasury Notes for their coins? And if so, would collectors want to eat that 40% loss? I doubt it. Most would likely stop collecting at the time. There would have to be a meeting of the sellers and buyers somewhere in between. If the collectors aren't buying, the prices will fall, and dealers would have to adjust. It would not be pretty. An interesting aside that would be good to discuss.
roadrunner
I would not want to be holding common date, lesser grade, uncertified gold, but I think with the size of the community that the out cries and law suits would deter confiscation of most good material. After all if the Gov. is looking for raw bullion to back currency the weight of what they would get would not be worth the years of hassle, to say nothing of creating and underground coin exchange.
I can just imagine some of the big money boys giving up their million dollar gold coins, and if they exempt theirs, they will have to exempt ours.
Currently even the modern gold I buy I want slabbed with an expert opinion of grade. This makes it pretty easy to make the case that it is a collection and not an accumulation.
As for other coins I agree with RR, but I think it would be easy to imagine that rarer coins might move up 10 to 15 percent all at once. In addition there is always a great deal of distrust even when the new money comes out.
I do hate to think about what would happen to my 401K plan.... since I only have limited things that I can invest in within the plan. Although... it does have a couple of foreign investment accounts.... perhaps time to increase allocations in the foreign accounts!!
be 5 ounces of gold or $2500. 99% of all households don't even own that much. I'm sure Bill Gates, Alan Greenspan, Donald Trump, and Warren Buffet to name but a few, have considerably more.
Here's another interesting similarity to the risk taking and gambling of our modern society and that of late 18th century France during the French Revolution. Very striking and one I had not noted before.
Take from Chris Waltzek's www.financialsense.com article.
Link is below:
Even worse than this was the breaking down of the morals of the country at large... from the gambling, speculative spirit... From this was developed an even more disgraceful result,--the decay of a true sense of national good faith..." from: Fiat Money Inflation In France.
Similarly, each year millions of Americans enjoy recreational gambling. More than two hundred years have elapsed since the French gambling episode. Yet domestic speculative fever is emerging in a new continent. Scratch and win tickets, lotto, as well as various games of chance are available in most communities. As mountains of inflated currency course through the nations commercial arteries, Internet gambling provides anyone with access to the World Wide Web and a credit card the ability to risk paper capital at a moments notice:
" Says the most brilliant of apologists for French revolutionary statesmanship, "Commerce was dead; betting took its place." from: Fiat Money Inflation In France.
Moreover, prosperous economic and political conditions mask the underlying costs associated with speculation and gaming. For instance, the stock market boom from 1980-2000 created incredible economic growth. The ensuing prosperity marginalized the damaging affects of gambling. In fact, one may argue that the satisfaction gained from occasional gambling is worth the invariable losses incurred.
"The French are naturally thrifty; but, with such masses of money and with such uncertainty as to its future value, the ordinary motives for saving and care diminished, And a loose luxury spread throughout the country. A still worse outgrowth was the increase of speculation and gambling..." from: Fiat Money Inflation In France.
Fiat Money Inflation in the US - Chris Waltzek
From poker on TV at every hour of the day, to Casino's, Sports Betting, stock picking, and 2nd and 3rd properties/homes, we have taken "betting" to a new zenith.
roadrunner
(On another topic, I've been following silver sales on ebay for the past few months -- it is a surprisingly efficient market -- this seems like a good means for a seller to get full value for bullion)