Regarding "When the world decides that they want to cash in their debt for currency we will see how much inflation in the dollar is headed our way."
The world is a very complex place; "When the world decides that they want to cash in their debt for currency," they are not going to do it overnight or even over several years. The bottom line of "cashing debt to currency" is that nations holding our debt are increasing their own domestic consumption. This requires a change in habit, culture, etc. It takes time. The US did not become the world's most voracious consumer overnight.
The most likely scenario is that the holders of US debt will gradually increase their consumption, we will decrease our consumption, and the situation will be resolved without a crisis.
While dollar crisis scenarios are certainly possible, it would be a mistake to view this as the most likely path. It is also important to appreciate that a dollar crisis could have either a deflationary or inflationary result, depending on the public policy response
"When the world decides that they want to cash in their debt for currency," they are not going to do it overnight or even over several years.
Higashiyama
Generally when ones makes a decision to start selling a particular asset, one does NOT continue to buy more. I agree that the foreign holders of our debt would not be stupid enough to try to dump their reserves, but how much more will they buy?
Just a few years ago we only needed to borrow 700 to 800 billion per year, last year it was a trillion 200 billion. January of next year the first group of millions of baby boomers start hitting a social security system that has NO funds in it. 2008 may be the year we need 2 trillion in debt from the world. Just the interest on our debt now runs at over 300 billion per year.
No one in congress dare talk about curbing any of our socialistic programs until after the 2008 elections, rather they are all talking about NEW national health insurance for all.
"...the holders of US debt will gradually increase their consumption..."
Fresh thinking here and fairly forward looking. It would stand to reason that as new players come to sit at the consumer table, they will...well...consume. That's good for us if we have consumables.
With us suckin' up all the biofuel material, there's a lot of folk that are sure going to be wishing they could get some of our corn to eat, Mexico is already wishin' and they are just across the river. We are going to be selling a lot of technology too and once our new table mates are advanced enough to use our gizmos, we will be selling them. It would also be reasonable to expect our advanced level of medical care to become consumable to new players, as soon as they can afford access. We may have to wait for a while before people start buying our stuff but one problem we have had is that most folk either don't need it just yet or can't afford it. We are very sophisticated and advanced consumers, we will have to wait for the others to catch up. Evolution is wonderful, it just takes time.
FT.COM IMF advised to sell $6.6bn of gold By Krishna Guha in Washington Published: January 31 2007 18:27 | Last updated: February 1 2007 03:04
The International Monetary Fund should sell gold worth $6.6bn (£3.4bn) and invest the proceeds in higher-yielding assets as part of a strategy to put its finances on a sound, long-term footing, an expert panel recommended on Wednesday.
The experts also advised that the IMF should charge for the bilateral technical assistance it provides to countries, although they said arrangements should be made to ensure poor countries continued to benefit from IMF help.
The panel included Alan Greenspan, former chairman of the US Federal Reserve, and Jean-Claude Trichet, president of the European Central Bank. It estimated that the sale of 400 tonnes of gold would create an endowment fund that would earn the IMF $195m a year in additional revenues after inflation.
The IMF holds 3,217 tonnes of gold in total. The panel recommended that the world’s central banks reduce their planned gold sales – set out in an international accord – by an equivalent amount so as to offset the effect of the IMF sale on the world gold market.
The IMF faces long-term financial problems because its traditional source of revenue – profits on lending – has dried up as countries have paid back giant loans extended during financial crises.
The extra money is needed to help plug an estimated shortfall of $400m a year in the IMF’s current income and expenses by 2010. The IMF is funding current activities in part by drawing on its reserves – not sustainable in the long run.
Sure, the IMF should folllow the UK's lead where they dumped 50% of their gold at $260/0z just a few years ago. I'm sure they put that money into some real high yielding assets while the gold price has gone up 150%. Way to go Mr. Gordon Brown! Anyone holding 6 Billion in gold at this time, and keeping it for a few years is gonna be thanking their lucky charms.
<< <i>Would someone really smart tell me exactly what has changed from the price of $75 a barrel to the current $53? >>
A couple of things happened. The election was the first. In order to drop the price of oil Goldman Sachs, the US investment partner changed their index weighting to lower oil futures and this forced many smaller funds that follow their index to dump also, this caused the big drop in oil futures in August/Sept. These were futures for delivery in this year.
Next is a very interesting scenario. The story goes back to the fall of the USSR in 1989. The only thing that kept their economy afloat was the income from oil. The US military protection for the Saudi rulers came with a price. They agreed to flood the market with oil effectively bankrupting the Soviets and causing the collapse of their government.
Now we are in 2007. The only thing keeping the Iranian ruler in power is the billions from oil that support the vast social programs. They are the #2 oil exporter. Also, Venezuela , a new socialist regime is getting vast amounts from oil. There is reason to believe that this may be the same squeeze play coming on the Iranians as they continue to defy the calls to end their nuke plans.
The Saudi's don't want a nuclear Shiite Iran. Dropping the oil prices will cause a major drop in Iranian revenue. The Saudis can afford to miss a llittle income, Iran cannot. It's already starting to cause major unhappiness in Iran. >>
On the money but here's a bit more info. Iran is also the 2nd largest importer of gasoline and refined oil products(after us, of course). They are sitting on tons of crude with very little way to refine it. Therefore the drop in prices hurts them doubly. They are importing more than anyone in the Middle East and getting far less for their exports.
Just a little more to the tale, but it's certainly being manipulated that way via the Saudi's and ourselves. Dick Cheney didn't just spend time in Saudi to give his regards to the royal family. We are in on the deal as well. I could see oil fall back to the $20s before the squeeze is released, assuming the Iranians fail to learn quickly from this. They refuse to learn, the squeeze continues. The Saudis are prepared to do this for the forseeable future, it could go on for many months or even as much as over a year. It's up to Iran to cut the sabre ratttling. Then, of course, there is always the Israeli Air Force who will put a nuclear stamp on the Iranians forehead if they don't get the message through this petroleum/monetary play. I suspect they will get the message before it comes to that. US forces in Iraq are also ending the catch and release program of Iranians caught in Iraq. The new push is trap and kill and that's where all these additional troops are going and why we are sending in more ground forces.
"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
By 2010 Gold to $2,000. Silver to $75. Silver has a lot more catching up to do than Gold.
"The answer was in the Patriots eyes. Gone were the swagger and c0ck sure smirks, replaced by downcast eyes and heads in hands. For his poise and leadership Eli Manning was named the game's MVP. The 2007 Giants were never perfect nor meant to be. They were fighters, scrappers....now they could be called something else, World Champions."
Whoa, How much can we spend with these guys? Can you say a trillion per year in this deficit alone? I wonder what we are now spending on printing presses; these babies have to be smoking.
U.S. Trade Deficit Hits New Record High Tuesday February 13, 6:05 pm ET By Martin Crutsinger, AP Economics Writer
U.S. Trade Deficit Hits Record High for Fifth Consecutive Year WASHINGTON (AP) -- The U.S. trade deficit set a record for a fifth straight year, and the imbalance with China soared to an all-time high as well.
The Bush administration pledged to keep pursuing its free-trade policies, while Democrats now controlling Congress demanded a change in course.
The gap between what the U.S. sells abroad and what it imports rose to a record $763.6 billion last year, up 6.5 percent from the previous record of $716.7 billion in 2005, the Commerce Department reported Tuesday. For December, the deficit jumped a bigger-than-expected 5.3 percent to $61.2 billion.
Rob Kirby continues to dig into the status of US gold reserves. His article brings up the point that the reserves have been renamed a few times in recent years. Most currently they have renamed the majority of the stocks as "deep reserves." Kirby's suggestion is that the US gold has been swapped (sold into the market) for "deep gold" not yet mined via derivatives on gold miner's future outputs. Further, he concludes that shareholders AND the US govt would be counting on getting value for that gold someday. An impossible situation. Much the same thing as the IMF and CB's counting their gold swaps and leases twice. If the US has indeed swapped all it's bullion gold for yet unmined gold, imagine the consequences? There is already indication that the US is swapping coined gold as well...basically because that was all that might be left. So why not deep gold too? Why the need to change the title of our gold bullion from "reserves" to "deep gold?" Maybe they are not our reserves any more but someone else's?
Bottom line: potentially better to have gold in one's hand than be part of an ETF, gold mine, etc. Who knows who will end up with the gold in the end. But history indicates it's not Joe Schmoe who gets the "paper" gold, even if he has title to it.
RR, Deep storage is the tunnel we built under the reserves so we could ship the gold to China without going by train and ship. Gee 11 billion in Gold that’s about 6 days trade deficit!
At 261,000,000 ounces, valued at around $42/oz, that is indeed $11 Billion. But at current prices that gold is worth more like $180 Billion. So that would last all of 90 days!
I've been told that the treasury sticks to the $42/oz number so as not to add fuel to the inflation fire. Now that's a hoot.
OK, so we nailed the ARM crunch/housing collapse and got ready, we nailed the over inflated stock market and kept things fundamentally tight, we nailed the emerging India and China markets and got a few emerging market funds (eventhough they aren't quite as emergant today as they were a couple of weeks ago), we nailed gold moving from the mid 400's to 600+ today and every body has a little pile, now were even clued into BRIC...everybody is set and ready for what comes next but, well, what comes next? We never really discussed what comes next. The cool thing is that we were no more than 18 months ahead of the curve with our prognostications but we really never discussed what comes next (no ammo/firearm photos yet please).
Are we seeking a flight to liquidity, are we holding our positions, are we going into the doomsday defense/duck and cover, are we moving to Dubai...what to do?
So "where to now St. Peter, show me which road I'm on"
It takes time and a dash of cold water in the face to change psychology. Once gold sets a new high it should drift higher along with interest rates. It will spurt higher on days where the dollar is weak. Movement will be more subdued but steadier in one direction. Silver might not tag along unless the economy is strong somewhere. Oil will begin an upward trend only as mass economies improve but might get nailed by supply constraints.
Here is my personal take on what may be next. I believe in the next few months we are going to see a recession. In reality what will be happening is stagflation. All of the world markets are now controlled and moved strictly on speculation as true investors just watch. A very good example of this was the re-valuation of the Yen several days ago and the drop in stock markets world wide, as big institutions began covering their positions and getting liquid.
There is absolutely no reason for the metals to have dropped other than the big speculators getting money out of that market also, to cover their carry trade business that no longer made them profits.
What all of must be careful of is not to get caught up in any panic selling of hard assets that has no basis in reality. Governments around the world are still printing money, and debt, as fast as the presses can roll, so nothing has changed there. If in fact we have a worldwide recession then China and some of the Arab countries will not be able to buy as much of our new debt, or roll over debt, and that means more printing of cash to pay the bills.
I actually think that we might see a lull in this hot 5-year coin market and perhaps even some panic selling by dealers with to much inventory, but this will not be a good for collectors to sell off their better coins, since the true inflation we will see next year, and the years beyond, has yet to begin. This might be a good time for collectors to pick up those very rare and hard to find coins that may only come to market every few years, so strictly buy quality and not quantity until the situation changes.
Even if we see a recession we are likely to see interest rates increased by the Fed, as they must do some serious bribing in order to keep the sales moving.
Our basic scenarios of keeping ones debt load low, staying with paid for assets, and a little cash on hand, has not changed in my opinion!
If you like and enjoy your coins and collections, there is no reason to sell them no matter what the economic situation may be (assuming you can support yourself). If you're in it for investment purposes, of course it's a good time to sell when and before the market dips. Then you can rebuy nearer the bottom. I'm very skeptical about people who never believe it's ever time to sell anything--through thick, think, good and bad, they always manage to find a reason or justification for holding on to assets as they plummet into the salty sea.
I tried to post a link on Kitco that had Market Watch in it but it wouldn't allow it. It reviews the suprise in the Feb PPI and an interesting read if anyone is interested.
NEW YORK (Market Watch) -- Gold futures extended gains early Thursday after a surprise rise in producer prices fueled inflation worry. Gold for April delivery was up $4.20 at $646.70 an ounce on the New York Mercantile Exchange. Other metals were also higher with platinum adding $18 to $1,219 an ounce. The Labor Department said producer prices rose 1.3% in February, well ahead of the 0.6% gain economists surveyed by Market Watch were expecting. Excluding food and energy, prices rose 0.4%, twice the 0.2% gain economists were forecasting. Separate data on manufacturing in the New York region were weaker-than-expected.
Just as most of us suspected, the Stock market is manipulated so the average investor will lose his money. If you want to gamble go to Las Vegas.
Business
March 27, 2007, 10:46PM
Don't miss the real point in Mad Money host's flap!
The host of CNBC's ear-splitting Mad Money is under fire for an interview in which he appears to advocate manipulating stocks.
In the interview, Cramer said that when he — presumably he's talking about his hedge fund as an extension of himself — had a short position and needed stocks to fall, he would place sell orders before the market opened, thereby driving the stock down at the opening. If he needed stocks to rise, he would place buy orders ahead of the opening.
Cramer said he would "maybe commit $5 million in capital, and I could affect it." Now, the market is bigger, so it might take more money, he added.
"Maybe you need $10 million in capital to knock the stuff down," Cramer said. "But it's a fun game, and it's a lucrative game." Fun, that is, if you happen to have $5 million or $10 million to blow on a daily basis. Most investors, of course, don't.
He went on to describe another practice — it's unclear if he actually did this or was speaking hypothetically — in which he would use a series of escalating bids and purchases to drive up a stock's price, or make declining offers and sales to drive it down.
For that, Cramer said he'd be willing to spend as much as $20 million. The message for investors is that by the time they're in a stock, a hedge fund manager may be out there betting $20 million against them.
There is some truth to what Cramer says. I cant believe I find myself agreeing with him as I believe him to be a disgrace to the business and feel sorry for those that follow him religiously. But anyway, even as a small time, punk a$$ daytrader I can move certain stocks by 10c.
I believe what he is talking about are small stock moves over a very small time period. A 50c drop or gap up at the open is no big deal since most times this is move is corrected within the first 15 minutes of trading. The average Joe has no business playing stocks for 10c or 5 minutes, and therefore should get his a$$ handed to him if he tries. It is the business of the trader to make money in stocks, just as it is the business of the coin dealer to make money in coins.
Joe can however do well in both stocks and coins if he takes time into consideration, hence eliminating any advantage the trader or dealer may have.
People toss in fake buy and sell orders all the time. This is suddenly a news item in 2007? The market ain't kindergarten class- you actually have to think.
Back in the 1990's, the groupies used to run around trying to figure out what Fidelity Magellan was buying. I don't know who originated the rumors, but I can speculate!
Heck, I used to lean on legitimate orders placed by funds, and scoop profit off them. Pretty easy pickin's, actually, back when everyone was saying how trading is evil. But once everyone figured out what was to do, the rules were changed and it's much, much tougher to do it today. I focus elsewhere.
The cpi is such crap...surely there is a better, less hyped, government provided indicator of how our economy is moving. No meaningful rise in cpi...pfffftttttttt. No fuel or food in the cpi calculation...pfftttt. No wonder people aren't saving...there is no meaningful rise in the cpi...inflation is in check, life is good so no need to save....pffffffftttt. Has anyone noticed their bag of groceries is going for about $30 a bag and their car needs $40 a week in fuel for commuters...pffffftttttttt!!!
Comments
<< <i>Coyncycler, very astute geopolitical observations >>
Did I earn a bite of your jelly donut??
Camelot
The world is a very complex place; "When the world decides that they want to cash in their debt for currency," they are not going to do it overnight or even over several years. The bottom line of "cashing debt to currency" is that nations holding our debt are increasing their own domestic consumption. This requires a change in habit, culture, etc. It takes time. The US did not become the world's most voracious consumer overnight.
The most likely scenario is that the holders of US debt will gradually increase their consumption, we will decrease our consumption, and the situation will be resolved without a crisis.
While dollar crisis scenarios are certainly possible, it would be a mistake to view this as the most likely path. It is also important to appreciate that a dollar crisis could have either a deflationary or inflationary result, depending on the public policy response
Higashiyama
Generally when ones makes a decision to start selling a particular asset, one does NOT continue to buy more. I agree that the foreign holders of our debt would not be stupid enough to try to dump their reserves, but how much more will they buy?
Just a few years ago we only needed to borrow 700 to 800 billion per year, last year it was a trillion 200 billion.
January of next year the first group of millions of baby boomers start hitting a social security system that has NO funds in it. 2008 may be the year we need 2 trillion in debt from the world. Just the interest on our debt now runs at over 300 billion per year.
No one in congress dare talk about curbing any of our socialistic programs until after the 2008 elections, rather they are all talking about NEW national health insurance for all.
"...the holders of US debt will gradually increase their consumption..."
Fresh thinking here and fairly forward looking. It would stand to reason that as new players come to sit at the consumer table, they will...well...consume. That's good for us if we have consumables.
With us suckin' up all the biofuel material, there's a lot of folk that are sure going to be wishing they could get some of our corn to eat, Mexico is already wishin' and they are just across the river. We are going to be selling a lot of technology too and once our new table mates are advanced enough to use our gizmos, we will be selling them. It would also be reasonable to expect our advanced level of medical care to become consumable to new players, as soon as they can afford access. We may have to wait for a while before people start buying our stuff but one problem we have had is that most folk either don't need it just yet or can't afford it. We are very sophisticated and advanced consumers, we will have to wait for the others to catch up. Evolution is wonderful, it just takes time.
<< <i>Still climbing......Gold futures at 7 week high.
And still climbing........
Kitco
FT.COM
IMF advised to sell $6.6bn of gold
By Krishna Guha in Washington
Published: January 31 2007 18:27 | Last updated: February 1 2007 03:04
The International Monetary Fund should sell gold worth $6.6bn (£3.4bn) and invest the proceeds in higher-yielding assets as part of a strategy to put its finances on a sound, long-term footing, an expert panel recommended on Wednesday.
The experts also advised that the IMF should charge for the bilateral technical assistance it provides to countries, although they said arrangements should be made to ensure poor countries continued to benefit from IMF help.
The panel included Alan Greenspan, former chairman of the US Federal Reserve, and Jean-Claude Trichet, president of the European Central Bank. It estimated that the sale of 400 tonnes of gold would create an endowment fund that would earn the IMF $195m a year in additional revenues after inflation.
The IMF holds 3,217 tonnes of gold in total. The panel recommended that the world’s central banks reduce their planned gold sales – set out in an international accord – by an equivalent amount so as to offset the effect of the IMF sale on the world gold market.
The IMF faces long-term financial problems because its traditional source of revenue – profits on lending – has dried up as countries have paid back giant loans extended during financial crises.
The extra money is needed to help plug an estimated shortfall of $400m a year in the IMF’s current income and expenses by 2010. The IMF is funding current activities in part by drawing on its reserves – not sustainable in the long run.
<< <i>The International Monetary Fund should sell gold worth $6.6bn (£3.4bn) >>
Do they even have the gold? or is it just commitments from the CRBs who may have it leased elsewhere and would not be able to delivery anyway??
If they cannot meet their financial obligations then they should liquidate gold. I heard that Iraq just issued smoe bonds yielding 9%.
Knowledge is the enemy of fear
roadrunner
If IMF has no income because people paid them back (and stopped borrowing more), how in the he11 does it waste $400 million every year?
<< <i>
<< <i>Would someone really smart tell me exactly what has changed from the price of $75 a barrel to the current $53? >>
A couple of things happened. The election was the first. In order to drop the price of oil Goldman Sachs, the US investment partner changed their index weighting to lower oil futures and this forced many smaller funds that follow their index to dump also, this caused the big drop in oil futures in August/Sept. These were futures for delivery in this year.
Next is a very interesting scenario. The story goes back to the fall of the USSR in 1989. The only thing that kept their economy afloat was the income from oil. The US military protection for the Saudi rulers came with a price. They agreed to flood the market with oil effectively bankrupting the Soviets and causing the collapse of their government.
Now we are in 2007. The only thing keeping the Iranian ruler in power is the billions from oil that support the vast social programs. They are the #2 oil exporter. Also, Venezuela , a new socialist regime is getting vast amounts from oil. There is reason to believe that this may be the same squeeze play coming on the Iranians as they continue to defy the calls to end their nuke plans.
The Saudi's don't want a nuclear Shiite Iran. Dropping the oil prices will cause a major drop in Iranian revenue. The Saudis can afford to miss a llittle income, Iran cannot. It's already starting to cause major unhappiness in Iran. >>
On the money but here's a bit more info. Iran is also the 2nd largest importer of gasoline and refined oil products(after us, of course). They are sitting on tons of crude with very little way to refine it. Therefore the drop in prices hurts them doubly. They are importing more than anyone in the Middle East and getting far less for their exports.
Just a little more to the tale, but it's certainly being manipulated that way via the Saudi's and ourselves. Dick Cheney didn't just spend time in Saudi to give his regards to the royal family. We are in on the deal as well. I could see oil fall back to the $20s before the squeeze is released, assuming the Iranians fail to learn quickly from this. They refuse to learn, the squeeze continues. The Saudis are prepared to do this for the forseeable future, it could go on for many months or even as much as over a year. It's up to Iran to cut the sabre ratttling. Then, of course, there is always the Israeli Air Force who will put a nuclear stamp on the Iranians forehead if they don't get the message through this petroleum/monetary play. I suspect they will get the message before it comes to that. US forces in Iraq are also ending the catch and release program of Iranians caught in Iraq. The new push is trap and kill and that's where all these additional troops are going and why we are sending in more ground forces.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
"The answer was in the Patriots eyes. Gone were the swagger and c0ck sure smirks, replaced by downcast eyes and heads in hands. For his poise and leadership Eli Manning was named the game's MVP. The 2007 Giants were never perfect nor meant to be. They were fighters, scrappers....now they could be called something else, World Champions."
There seemed to be a failed sell off last weekend. The price is showing every sign of wanting to drop.
Maybe it's actually time for a little breakout.
How much can we spend with these guys? Can you say a trillion per year in this deficit alone? I wonder what we are now spending on printing presses; these babies have to be smoking.
U.S. Trade Deficit Hits New Record High
Tuesday February 13, 6:05 pm ET
By Martin Crutsinger, AP Economics Writer
U.S. Trade Deficit Hits Record High for Fifth Consecutive Year
WASHINGTON (AP) -- The U.S. trade deficit set a record for a fifth straight year, and the imbalance with China soared to an all-time high as well.
The Bush administration pledged to keep pursuing its free-trade policies, while Democrats now controlling Congress demanded a change in course.
The gap between what the U.S. sells abroad and what it imports rose to a record $763.6 billion last year, up 6.5 percent from the previous record of $716.7 billion in 2005, the Commerce Department reported Tuesday.
For December, the deficit jumped a bigger-than-expected 5.3 percent to $61.2 billion.
Rob Kirby continues to dig into the status of US gold reserves.
His article brings up the point that the reserves have been renamed a few times in recent years. Most currently they have renamed the majority of the stocks as "deep reserves." Kirby's suggestion is that the US gold has been swapped (sold into the market) for "deep gold" not yet mined via derivatives on gold miner's future outputs. Further, he concludes that shareholders AND the US govt would be counting on getting value for that gold someday. An impossible situation. Much the same thing as the IMF and CB's counting their gold swaps and leases twice. If the US has indeed swapped all it's bullion gold for yet unmined gold, imagine the consequences? There is already indication that the US is swapping coined gold as well...basically because that was all that might be left. So why not deep gold too? Why the need to change the title of our gold bullion from "reserves" to "deep gold?" Maybe they are not our reserves any more but someone else's?
Bottom line: potentially better to have gold in one's hand than be part of an ETF, gold mine, etc. Who knows who will end up with the gold in the end. But history indicates it's not Joe Schmoe who gets the "paper" gold, even if he has title to it.
roadrunner
Deep storage is the tunnel we built under the reserves so we could ship the gold to China without going by train and ship. Gee 11 billion in Gold that’s about 6 days trade deficit!
gold reserves not actually existing, is like not telling a
hunter that there are no bullets in the gun. Don't want to get
folks all nervous in the service .....do we?
Camelot
So that would last all of 90 days!
I've been told that the treasury sticks to the $42/oz number so as not to add fuel to the inflation fire. Now that's a hoot.
roadrunner
HE>I
BTW---I believe volatility is aboyt to make its way back into the equity markets. Investors would be wise to keep an eye on BRIC.
Knowledge is the enemy of fear
roadrunner
We have worthless money , backed only by the Government's hot air
The Government is backed by gold that has not been mined yet
The gold as yet unmined, might not even be there.
OK, I have it now. Nothing at all to worry about.
Camelot
That gold may be there in the ground, but who owns it? The shareholders or the entity who owns the derivative on the mine's future production?
roadrunner
<< <i>I think "deep reserves" refers to the idea that the gold is not very high on the govt's asset list.
BTW---I believe volatility is aboyt to make its way back into the equity markets. Investors would be wise to keep an eye on BRIC. >>
I hope everyone paid heed. The C in BRIC was down 9% last night.
Knowledge is the enemy of fear
<< <i>BTW---I believe volatility is aboyt to make its way back into the equity markets. Investors would be wise to keep an eye on BRIC. >>
Damn. Now THAT was prescient.
My icon IS my coin. It is a gem 1949 FBL Franklin.
As the saying goes, "I wish I had said that."
Great call, give this man a website and a newsletter!
OK, so we nailed the ARM crunch/housing collapse and got ready, we nailed the over inflated stock market and kept things fundamentally tight, we nailed the emerging India and China markets and got a few emerging market funds (eventhough they aren't quite as emergant today as they were a couple of weeks ago), we nailed gold moving from the mid 400's to 600+ today and every body has a little pile, now were even clued into BRIC...everybody is set and ready for what comes next but, well, what comes next? We never really discussed what comes next. The cool thing is that we were no more than 18 months ahead of the curve with our prognostications but we really never discussed what comes next (no ammo/firearm photos yet please).
Are we seeking a flight to liquidity, are we holding our positions, are we going into the doomsday defense/duck and cover, are we moving to Dubai...what to do?
So "where to now St. Peter, show me which road I'm on"
It takes time and a dash of cold water in the face to change psychology. Once
gold sets a new high it should drift higher along with interest rates. It will spurt
higher on days where the dollar is weak. Movement will be more subdued but steadier
in one direction. Silver might not tag along unless the economy is strong somewhere.
Oil will begin an upward trend only as mass economies improve but might get nailed
by supply constraints.
These won't be interesting times quite yet.
Here is my personal take on what may be next. I believe in the next few months we are going to see a recession. In reality what will be happening is stagflation. All of the world markets are now controlled and moved strictly on speculation as true investors just watch. A very good example of this was the re-valuation of the Yen several days ago and the drop in stock markets world wide, as big institutions began covering their positions and getting liquid.
There is absolutely no reason for the metals to have dropped other than the big speculators getting money out of that market also, to cover their carry trade business that no longer made them profits.
What all of must be careful of is not to get caught up in any panic selling of hard assets that has no basis in reality. Governments around the world are still printing money, and debt, as fast as the presses can roll, so nothing has changed there. If in fact we have a worldwide recession then China and some of the Arab countries will not be able to buy as much of our new debt, or roll over debt, and that means more printing of cash to pay the bills.
I actually think that we might see a lull in this hot 5-year coin market and perhaps even some panic selling by dealers with to much inventory, but this will not be a good for collectors to sell off their better coins, since the true inflation we will see next year, and the years beyond, has yet to begin. This might be a good time for collectors to pick up those very rare and hard to find coins that may only come to market every few years, so strictly buy quality and not quantity until the situation changes.
Even if we see a recession we are likely to see interest rates increased by the Fed, as they must do some serious bribing in order to keep the sales moving.
Our basic scenarios of keeping ones debt load low, staying with paid for assets, and a little cash on hand, has not changed in my opinion!
Central Banks reserves lowest since 1948 CB reserves
Kitco website
NEW YORK (Market Watch) -- Gold futures extended gains early Thursday after a surprise rise in producer prices fueled inflation worry. Gold for April delivery was up $4.20 at $646.70 an ounce on the New York Mercantile Exchange. Other metals were also higher with platinum adding $18 to $1,219 an ounce. The Labor Department said producer prices rose 1.3% in February, well ahead of the 0.6% gain economists surveyed by Market Watch were expecting. Excluding food and energy, prices rose 0.4%, twice the 0.2% gain economists were forecasting. Separate data on manufacturing in the New York region were weaker-than-expected.
Business
March 27, 2007, 10:46PM
Don't miss the real point in Mad Money host's flap!
The host of CNBC's ear-splitting Mad Money is under fire for an interview in which he appears to advocate manipulating stocks.
In the interview, Cramer said that when he — presumably he's talking about his hedge fund as an extension of himself — had a short position and needed stocks to fall, he would place sell orders before the market opened, thereby driving the stock down at the opening. If he needed stocks to rise, he would place buy orders ahead of the opening.
Cramer said he would "maybe commit $5 million in capital, and I could affect it." Now, the market is bigger, so it might take more money, he added.
"Maybe you need $10 million in capital to knock the stuff down," Cramer said. "But it's a fun game, and it's a lucrative game."
Fun, that is, if you happen to have $5 million or $10 million to blow on a daily basis. Most investors, of course, don't.
He went on to describe another practice — it's unclear if he actually did this or was speaking hypothetically — in which he would use a series of escalating bids and purchases to drive up a stock's price, or make declining offers and sales to drive it down.
For that, Cramer said he'd be willing to spend as much as $20 million.
The message for investors is that by the time they're in a stock, a hedge fund manager may be out there betting $20 million against them.
I believe what he is talking about are small stock moves over a very small time period. A 50c drop or gap up at the open is no big deal since most times this is move is corrected within the first 15 minutes of trading. The average Joe has no business playing stocks for 10c or 5 minutes, and therefore should get his a$$ handed to him if he tries. It is the business of the trader to make money in stocks, just as it is the business of the coin dealer to make money in coins.
Joe can however do well in both stocks and coins if he takes time into consideration, hence eliminating any advantage the trader or dealer may have.
Knowledge is the enemy of fear
People toss in fake buy and sell orders all the time. This is suddenly a news item in 2007? The market ain't kindergarten class- you actually have to think.
Back in the 1990's, the groupies used to run around trying to figure out what Fidelity Magellan was buying. I don't know who originated the rumors, but I can speculate!
Heck, I used to lean on legitimate orders placed by funds, and scoop profit off them. Pretty easy pickin's, actually, back when everyone was saying how trading is evil. But once everyone figured out what was to do, the rules were changed and it's much, much tougher to do it today. I focus elsewhere.
Ren
<< <i>So, Russia says USA will invade Iran this friday between 4am and 4pm. Any gold, silver, platinum, rhodium and oil price predictions?
Ren >>
Buy uranium. With any luck we will exhaust some of our supply.
Knowledge is the enemy of fear
The cpi is such crap...surely there is a better, less hyped, government provided indicator of how our economy is moving. No meaningful rise in cpi...pfffftttttttt. No fuel or food in the cpi calculation...pfftttt. No wonder people aren't saving...there is no meaningful rise in the cpi...inflation is in check, life is good so no need to save....pffffffftttt. Has anyone noticed their bag of groceries is going for about $30 a bag and their car needs $40 a week in fuel for commuters...pffffftttttttt!!!
Just a little note for tax day!