<< <i>Right now the dollar is cheap... very cheap, and commodities, most foreign currencies, and PMs are very expensive. Eventually, this cycle will reverse itself.
I remember back in 2000 / 2002 when a dollar was worth about about 1.15 euros and everyone was talking about how the European economies are so stagnant, they have bad demographics, too much red tape, etc. Fundamentally -- and I don't want to sound pollyanish here -- but not much has changes except the media hype. A major report came out yesterday confirming that our economy is the most competitive in the world. Our worker productivity level is the highest in the world. Our budget deficit and our trade deficit is shrinking, too. The stars have been aligned against us for a long time, but the situation will eventually turn. Bush is only in office for 1 more year, and after that, no matter who is in there, our reputation in the world is bound to improve.
However, the US dollar lags all those indicators. Good editorial in the Wall Street Journal a few days ago making these points and suggesting that we will see a rise in our currency in the medium term. Like Codohk, I am bullish about our future. I don't have a dog in the PM fight, but if I did, I would have cashed out my huge profits and waited for the next big opportunity. >>
IMO, everyone has an opinion - but dont base your thoughts on The Wall Street Journal - of course they are going to pump up the economy and the dollar - their life blood is based on a strong and robust Wall Street - I would like to be bullish on our future, but with all of the greed, deceit and lying in the corporate world this ecomomy is going down big time - it's time to pay the piper - when a fired CEO gets paid 160 million, leaving stockholders with the bill, I lose all faith in the corporate world - will the economy come back - my guess is as good as yours, but in the interim, protect yourself by hedging with PM until this storm is over - GO GOLD!!!!!
currently putting together a EF/AU/BU 18th & 19th Century Type Set; and CC Morgan Set
just completed 3d tour to Iraq and retired after 28+ years in the US Army
Still in with both feet. Ok, so where's the next real resistance point of any note? I'd say it's not until 4 digits. We've already been to $850 27 years ago so that's actually old ground. Question is, where will the cartel try again with all their efforts to turn gold sharply? Probably a fight at $850-$875 but I still don't count that as true resistance. Wait until over $1000. That could be as early as this spring.
Friday closes were strong during the Sept 2005 - May 2006 runup. And similarly Friday's have been strong on this last run up from $675 as well.
Mr. Sinclair is even more worried this week read below, but here is something interesting from an old article several years ago.
“Sinclair has always stood apart from the crowd. On the walls of his office hang six photographs of Shri Sathya Sai Baba, a guru in India whom Sinclair visits several times a year.”
So the question is, is he getting inside info. from the Astral Plane through his teacher?
“This is quite serious because the message is not Citicorp or Merrill, but another derivative soon to be tested and soon to fail: credit default derivatives. Lets pray it does not get out of hand in 2007-2008. Be prepared for major geopolitical disturbances in 2010 which when added to a massive monetary inflation will do things even the out of control gold guys do not anticipate. They do not know. I do."
There have already been reports of credit card derivative problems.
What has not been discussed though is that Europe and parts of Asia are going to suffer the same Real Estate crisis and the problems that come with it. Already in New Zealand people can not afford to buy real estate. If there are no buyers, well, I think we know what happens next. New Zealand has been a major cause of the carry trade problem. They will enter a recession soon and have to lower interest rates. This will spread to Australia, Malaysia, Indonesia and then to Europe. China can not sustain its growth rate and will begin to slow. Demand for capital will dry up---some will evaporate. Global interest rates will begin falling.
Credit default derivatives (CDO's) are not "credit card derivative" risk. Credit defaults are the policies that the big boys take out to ensure themselves from other bad commercial paper. And there's so much bad (and undefined) paper out there, it will make the mortgage derivatives and credit card derivatives (a measly $1 TRILLION) look pesky.
Credit defaults are in the dozens of $ TRILLIONS for starters. Interest rate bets are in the hundreds of $$ TRILLIONS. This is what Sinclair has been preaching for years, the true big picture of major bank and financial institution credit. If the end payer goes upside down, then who pays off the original bet? It gets real ugly from there when talking $450 TRILLION in total derivatives, of which most is unregulated and improperly valued by both ends of the transaction. Up to now, everyone won. Now that regulators are looking into valuing this swill, they will find almost no value to it. Merrill Lynch may be hanging by a thread after an 8% loss today. The FED's injection of $41 BILLION today indicates something is not right at all. That coupled with the 1/4% rate cut is a huge change. That injection is the largest since Sept 2001 following 9/11. Bank of America has closed its gold trading desk....not profitable enough. Everything is certainly rosy in bankland.
Over the last few weeks as the coin and metals markets heated up we have had several new posters to our thread, that’s great! The more minds here the better.
To help some of the new members here, that may want to buy some bulk gold and silver coins. Would some of our more experienced traders please list some of their dealers they do business with.
I know that many of these recommendations are scattered out in this thread but might not be easy to find now.
Lets help some of our new brothers and sisters here, by giving them some names and website addresses of those bullion dealers that we know to be honest to deal with and that offer the best prices.
Like I said above, I am bearish in the short run but bullish in the longer run. My guess is that the US will see a recession in the next 12-18 months, but I don't buy all the doom and gloom. The stories the media tells often fail to put things in perspective. Here are a few interesting facts that might put that in perspective:
Government debt. From the news accounts you would think our government was absolutely bankrupt. I don't deny that our debt is way too big for my tastes. Even after Bush's profligacy of the last 6 years, however, the public debt of the US compared with GDP is (relatively) not bad. In fact, we are only #31 on the list when you look at the debt in proportion to the size of our economy. Our existing government debt is about 65% of GDP. LINK. By contrast, Japan is #2 on the list and has government debt equal to 176% of GDP (These figures obviously don't include future liabilities for medicare and social security. Two quick points on that. First, other countries have the same problems (maybe worse than ours because of demographics), and second, those benefits are subject to Congressional change.)
Second, let's say we have a recession. Economy might contract 1% or 2% as it did the last few recessions. What does that mean in the big picture? Our GDP is currently about $13.1 trillion. That means our economy in a recession is still producing about $12.97 trillion in output (if the contraction is 1%) or $12.84 trillion (assuming a 2% contraction). Not great, but compared with the "sky is falling" news coverage that you will see, it puts the figures in a very different perspective.
"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)
"...names and website addresses of those bullion dealers that we know to be honest to deal with and that offer the best prices. "
You might laugh but since we're talking with new posters...DoYourOwnDamnDueDiligence guys and gals. If you want free advice with gold...that's not a good way to start. Secondly, I'm not a gold bar guy, I like US numismatic bullion as PM. US because if we're in the US and if we're trying to sell foreign numismatic bullion then me personally sees that there may be some compromising situations where your foreign numismatic bullion may not be quite as desirable. It was also protected in the '33 recall (although limited as to personal holdings). Exchange traded funds are not my way either though I do own a little mining stock just for a play. And, I'm not a kind of guy that runs out 10K's or something in a big splurge, I'm an accumulator...an oz here, couple of oz's there, nice coin here, pick up at a show...nice and easy does it, never stretch (well maybe a time or two). So, numismatic bullion is the way I play.
The US Mint is a good place to get started. I normally don't like to buy gold from websites but I am very comfortable with Heritage and with the US Mint. US Mint charges no insurance and lately, they have been just over spot by a few buks as opposed to Kitco who is getting $42 and change over spot and that's well before you get to shipping charges and other expenses from other websites. For example, US Mint GAE oz is $831 right now with $5 shipping and it is insured by the US Mint at no charge to the buyer. Hard to go wrong with US Mint issued numismatic bullion and who knows, you might just get lucky and catch some anomalie that leads to a short mintage. The other thing about the US Mint is that if your package is lost in the mail...hey, they send you another one, no BS.
Heritage is good because you have a good selection of products. The buyer's fees are kind of stiff as is shipping and insurance but if you're buying more numismatic than generic gold coin, there are some extra expenses that you just have to deal with because you're shopping at home.
By far, the best recommendation for buying bullion is wait for or go to a local/regional show. Meet the seller, hold the coin/bar, make a deal, put it in your pocket and stick the receipt in another pocket with his card and walk away. No insurance, no postage, no buyer's fees, no BS. Later, you can give him a call and know what kind of deal you have here. So, if you are a new poster looking for information about buying gold coin or numismatic gold or bar gold...hey, go to a show, it's all good! So there you go, see you there (and don't be bidding on any '08-S $10's right now...I'm not done).
I have been accumulating gold and silver over the last 4years. My favorites are,
U S mint,Teletrade, ebay(be careful,check seller feedback),bulliondirect and Tulving.com and monex, for bullion and numismatic bullion.
For numismatics Heritage, bowers and merena, superior , stacks and David Lawrence.
These are all great for accumulating physical assets.
Trading in and out of bullion fast in my retirement fund SLV, GLD,GDX on the stock exchange.
These boards have been a phenomenal resource as far as mint products go as well as teaching the pitfalls of numismatics. DO NOT believe for 1 second that the posters are financial advisors though and do your own due diligence.
The last 4 years have been amazing , a lot like the dot.com boom and property market in that you didnt have to be a genius to make a profit and this may change at any time.
Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects.
I agree with everything that Joflax says, except this:
Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects.
How much is "too much?" For me, too much might be 70% of my net worth. For someone in a different situation, too much might be 15%. I could sell a bunch right now and cash out with some great profits. But why? In my opinion, everything else that I might buy would be of less value to me, and riskier too. And that is just my opinion.
Q: Are You Printing Money? Bernanke: Not Literally
"some names and website addresses of those bullion dealers that we know to be honest to deal with and that offer the best prices."
APMEX.com Tulving.com (large minimums) CNI AJPM.com Chard's website (in the UK) are ones I have either ordered from or otherwise would have ordered from for bullion-esque type purchases.
The BST boards here are occasionally useful.
Anyone have any thoughts on Goldmoney.com? The James Turk website/offshore gold. It's not physical gold but not exactly what I think of when people talk about 'paper assets' either.
<< <i>I agree with everything that Joflax says, except this:
Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects.
How much is "too much?" For me, too much might be 70% of my net worth. For someone in a different situation, too much might be 15%. I could sell a bunch right now and cash out with some great profits. But why? In my opinion, everything else that I might buy would be of less value to me, and riskier too. And that is just my opinion. >>
I think that the financial advisors are touting 10-15% in hard assets. I agree with you that everyone has their own risk tolerance and I feel that US stocks(except for multi-nationals), and the dollar are not the place to be right now. My tolerance is also much higher than 15% in this market but that can change in 15 seconds with the advent of the ETFs.
You know Sir it is not so much that the “Sky is Falling”, its how much can you trust those that are supposed to be your reliable information centers.
We all live in the United States of America and it’s a great country, with a good economy, and great hard working folks, but is there any doubt in anyone’s minds that our government, and many of our large financial intuitions, are constantly lying to us and taking advantage of the un-informed?
Not counting all the money stolen, or “borrowed”, from all the Federal trust accounts, our current debt on the books is now $9,080,228,573,291.65. This debt is now going up at a rate of between ½ and one trillion per year. If we have such a strong economy why is it that we never pay any of this debt down?
The reason of course is we cannot. Our current foreign monetary reserves that we could use to strengthen the dollar amount to $90 billion dollars while those of other large countries is in the trillions.
Our government, like many of our citizens, is simply spending beyond its capacity to pay. Like Jim Rodgers said on many of the financial shows this weekend, “ If you want to continue to believe all these lies the Government, and the big money players on Wall Street are telling you, go ahead, but don’t complain when oil is at $150 a barrel, and your grocery bill is half of your take home pay.”
Don’t you think things are just a little out of whack when guys like Mr. Stan O’Neil can lose billions of dollars gambling with the publics money, and walk away with $160 million to retire on? How much do you think Mr. Prince will walk away with this weekend at Citi?
How many folks here have these, “Great” companies in their 401k’s and relied on these people to take care of their hard earned retirement money?
How many billions, if not trillions, of the publics dollars will be lost in the next 12 months.
<< <i>Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects. >>
How much is too much? It all depends on one's position in life. Current debt, family responsibilities, current income levels, etc. Too many variables to put a number on it. Each to his/her own.
A quick guestimate would put my PM holdings in the over 50% range and I'm adding to it over anything else right now. That's a tough figure to come up with as the housing market here is circling the drain, I don't even know what my home's value is. I know what it's appraised and insured at, but I really don't know what it would sell for and that's the true value of anything. I do know that the few homes that have sold have gone for as little as 55% of their appraised value, while some have brought as much as 80%. I also know there are for sale signs all over the place. When I bought here, a for sale sign was rare. Of the many places in Houston that I thought would be relatively safe from the housing bubble burst I knew was coming, this was one of them. In fact, if not for PMs, I wouldn't own the home I do. I can ride it out and in time I know I will walk away with a huge chunk of my retirement in hand from owning this home.
Been living with corrections for a long time now, if things like that bother you, stay out of PMs, particularly silver as she can be a cruel mistress.
OTOH, we are still in the first half of this bull, and just like oil isn't going to drop to $30 a barrel again, neither are PMs going to fall like that. Corrections are things that the short players have to worry about. Most of us are long and believe in holding physical as opposed to paper. In fact, many of us are here disdain the paper metals as they help the manipulators and hold prices down to unreasonably low levels. All the PMs should be much higher than they currently are, but then we know that this is and has been a manipulated market.
Slowly that sort of manipulation has been unwinding and we've been watching it with glee. I know I am. The house of cards is going to collapse, of that I have no doubt, tho only question is when, but we're getting closer and closer to it everyday. my guess is that in less than two years we'll look back at these current prices and smile and wish we could have invested more back when gold was "only" $800 and silver could still be grabbed for the incredible bargain of less than $15 an ounce. Just study the past charts for a little history lesson. Nearly all of the value in PMs comes in very short bursts near the end of the bull. Probably 80% of the gains are made in 2% of the time frame. That's just the nature of the beast, so when charts go vertical, don't spend a long time celebrating. Don't be buying then either. Even when a crash/correction comes, PMs are still going to have value and more than they have today. This isn't a paper dot.com sort of thing at all. We are talking real assets.
As far as liquidation goes, I doubt I'll do it all at once and just have to go with the gut feelings there. However, liquidation is no problem at all. I don't understand those who consider that an issue. I could do it all by Monday with a phone call this afternoon. I did it once already a few years ago when silver spiked up to $8 plus and it took less than 24 hours to sell 45,000 ounces of silver. I bought back in at a cost average of around $5 within a couple of months once the price had settled and the dust had cleared. People are like lemmings and act in a herd mentality, the trick is to relax and pick your spots. Sure, it takes a lot of study and a bit of luck. I can't count the number of people who freaked out during that big silver drop and sold out to me at spot or even less. They just couldn't take the volatility.
I suppose that it might depend on where one lives, but even then, if we're talking about a large number like many of us here. Something in the high 6 to 7 figures is certainly worth some phone calls and a drive. Call it a short vacation if you are way out in God's country, it's really not a big deal. I'm certain the next time I sell, it will be the last time. I'm thinking that time will be within the next 3 plus years or so. I doubt it will be much longer, but I can wait if need be.
I'm sure I'd have a tougher time selling my antiques than I would my PMs.
"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
Second, let's say we have a recession. Economy might contract 1% or 2% as it did the last few recessions. What does that mean in the big picture? Our GDP is currently about $13.1 trillion. That means our economy in a recession is still producing about $12.97 trillion in output (if the contraction is 1%) or $12.84 trillion (assuming a 2% contraction). Not great, but compared with the "sky is falling" news coverage that you will see, it puts the figures in a very different perspective.
Understand that one of the biggest factors in the GDP is the inflation deflator. If that is much understated, the GDP is way overstated. And from what I've read, the GDP inflation deflator is further off than the CPI. This past quarter the net value used for inflation was something like 0.8%. Can you believe that? Inflation of < 1% for the 3rd quarter? I bet that would be news to most homeowners and shoppers. That helped boos the GDP to well over 3% which was remarkable considering how flat the economy actually is. It's all about manipulating the numbers. And hence we will be several quarters further along into a recession than ever before just because of the rigged numbers. If the masses are thinking recession they cannot continue mass consumption and borrowing as required.
Sure is a lot of heated talk today concerning Sinclair's recommendations from a week or two ago to get hold of one's stock certificates and hunker down for a while. It's hard to scare a gold bug but those guys seem rather concerned.
"Citigroup taking an additional 8 - 11 billion loss.... on top of a previous announced loss"
Maybe they can jump the interest to 45% real quick and add a few dozen dollars to their "fee structure" before they are bought by some nice Indian company that takes the business to Bangalore.
The fix for Citi is easy when you think about it, the Chinese will buy it and put it on the Shanghai Exchange where the stock players in China will value it at a Trillion dollars, Why not? They did that with Petrochina yesterday!
The Shanghai stock market, the greatest casino in the WORLD!
Nov. 6 (Bloomberg) PetroChina yesterday almost tripled on its first day of trading in Shanghai, as shares surged to 43.96 yuan from the sale price of 16.7 yuan, giving the state-owned oil producer a greater market value than the entire Russian stock market.
China Struggles With Fuel Crunch, but Experts See No Change in Price Controls
BEIJING (AP) -- Bus drivers in the bustling southern province of Guangdong have a new daily chore: Hunting for diesel. Amid widespread shortages, service stations allow drivers just a few quarts at a time, forcing buses to stop repeatedly to fill up while passengers fume, said Dai Guowei, an employee of the Zhaoshang Passenger Transport Co.
I agree with cohodk's sentiment -- things are getting fun!
But, let me describe why in many ways I'm more optimistic now than I have been in quite a while:
(1) The derivative shake out that is now underway was all but inevitable, the only issue (which of course is not yet resolved) is the degree of the shake out, both from a perspective of the financial numbers and with respect to impact on the underlying "real" economy. ["real" in quotes, because it is a mistake to think that there is a well defined line between a real economy that produces things and an abstract economy on the books -- an economy is really just the sum total of what keeps us engaged in life -- when I say real I'm talking in a broad sense of real]
(2) In spite of apparently wacko valuations, things could have gotten much worse before the bubble began to burst or deflate. Perhaps the most important test of whether a bubble bursting will severely impact the real economy is whether resources have been grossly misallocated as a result of the bubble; after cleaning up balance sheets [personal and business], are economic structures flexible enough to allow a reasonably orderly reallocation of resources, especially human resources. My gut feeling is that yes, cleaning up after this bubble can happen in a reasonably orderly fashion.
(3) I think the bubble is bursting late enough that it may lead to a correction of imbalances in the global economy that are not sustainable long term [if the bubble made a little pop early on, and then kept growing, it would not do much to adjust imbalances], and early enough that the result will not be completely unpredictable and unmanageable.
(4) Without wanting sound like I have undue faith in the corrective powers of free markets, I believe most of the risks that exist are fundamentally political in nature, rather than economic, specifically:
(a) As apparent assets vanish from the balance sheets of financial institutions and other organizations, the effect is fundamentally deflationary. The Fed will and should move to counter this deflationary threat. It is probably relatively easy with our current knowledge of economics to prevent depression, but it is probably not easy to do so without overcompensating. From this perspective, I agree with the almost universal consensus on this list that increasing inflation is highly likely.
(b) Uncertainty arising from a range of issues (economy, likely change in the party in the White House, Iraq) increases the likelihood that politicians will want to effect change simply for the purpose of effecting change (for want of a better phrase, pandering to the public). There are some really big mistakes that could be made -- especially related to reigning in global free trade. While I personally believe that we should devote considerable energy to redefining the framework of global finances and trade -- the current scheme is far from perfect -- I think there is a real risk that half baked and ill-conceived measures will be implemented. In particular, poorly thought out protectionist measures could lead to a massive contraction in global trade. This could lead to near catastrophic instability parts of the world, and would lead further to dramatically increase inflationary pressures in the US. I don't think this is going to happen, but my general optimism is tempered by a concern over this possibility.
(5) The bottom line for the rambles above -- if we muddle along with decent but not exceptional performance from our bureaucrats, and our wonderful system of checks and balances can keep our politicians from making big mistakes, I'm not terribly worried about the emerging financial situation. It sure seems to point to higher inflation (and higher gold), but in terms of real wealth, Americans and the world are likely to be better off ten years from now than they are today.
<< <i> from what I've read, the GDP inflation deflator is further off than the CPI. This past quarter the net value used for inflation was something like 0.8%. Can you believe that? Inflation of < 1% for the 3rd quarter? I bet that would be news to most homeowners and shoppers. >>
I don't have a tremendous amount of confidence in the inflation figures, either, but keep in mind that core CPI excludes food and energy prices. There is both prices inflation and deflation happening simultaneously in the economy. A lot of things are more expensive than they used to be. However, some things are way cheaper than they used to be or you get a much improved product for the same price (electronics are the best example). I bought a car in late 2006 that cost me $8,000 less than the car I bought in 2001 (NOT counting inflation) and it's bigger, safer, and more powerful than what I used to drive.
We are not seeing the end of the world or anything that remotely warrants the type of panic a few folks are exhibiting on internet chat boards. America (and Boeing, Microsoft, Google, United Technologies, Goldman Sachs, McDonald's, Coca-Cola and a hundred other world-beating U.S. companies) ain't going anywhere.
However, this is starting to look like a replay of the 1970s. An unpopular and expensive war, high fuel prices, weak dollar. But even bad times contain a lot of buying opportunities. I will repeat what I've said before - the buying opportunities lie in those things that have gotten hammered in price in last few years. That doesn't include PMs or commodities. Those profits have already been made by folks smart enough to buy from 2000 to 2003.
"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)
As I have mention here before I live in a small town in Central Texas. I own several pieces of commercial real estate outside of town. Some of these have gravel roads that we maintain each year, so we buy about 100 tons of gravel each year.
I got a note this morning that dirt company was raising their prices by 20% to cover the cost of diesel fuel.
Since every single thing we all buy is shipped from one place to another, I got to thinking!
If all the folks moving all the products from place to place increase the cost of shipping by 20%, then how much are all the product prices going to go up in the next few months?
I guess these geniuses in Washington think it is just great to have a cheap dollar so we can export more, but I am not sure they figured that even the Super Models have figured this out.
One Arab finance minister recently made the statement that with the current value of the dollar the price of oil should be $120 dollars a barrel. Remember a couple of years ago when everyone laughed at those who said oil is going to $100?
"That is why I said watch the price of milk, bulky and heavy in transport. It is our inflation canary."
And right you likely are.
My vote goes for milk to hit $5/gal. before gasoline but it's going to be a horse race. Gasoline prices are somewhat manipulated and can somewhat be managed but the cost of milk in a jug at the grocery in the cold case is going to be a pretty realistic figure and hard to manipulate or deny.
I'll have to vote for milk - I was in the local Walmart Supercenter this past weekend and the price for a Walmart brand gallon of 2% was $4.74. A gallon of namebrand Whole Milk was priced at $5.18 so I guess we're there already.
Oil at $100 a brl is about $.15 a cup. You pay more for coffee and far less than those on the other side of the Atlantic that don't own oil. We are 30% more efficient at producing product for GDP than we were when oil spiked last. We can and will survive with oil much higher. Buy oil and gold if you want to preserve your wealth.
<< <i>Oil at $100 a brl is about $.15 a cup. You pay more for coffee and far less than those on the other side of the Atlantic that don't own oil. We are 30% more efficient at producing product for GDP than we were when oil spiked last. We can and will survive with oil much higher. Buy oil and gold if you want to preserve your wealth. >>
A gallon of cruide is not a gallon of usable refined product. It is remarkable how much the price of gasoline figures into inflating consumer goods and services, often multiple times based on component transport and fabrication. $100 oil is going to hurt if sustained. Maybe people can afford double the cost for the weeklt commutes but they might not be so comfortable when a lot of other things go up that they consume and cannot do without easily.
BTW, I am not in favor of buying big, integrated oil (like Exxon-Mobil). They start hitting their ceiling based on refining capacity and their margins must yield to the consumer at some point. The play, for me, is and has been in oil services, especially the ones who specialize in deep water. They also bite the big guys when they are in need.
<< <i>I'll have to vote for milk - I was in the local Walmart Supercenter this past weekend and the price for a Walmart brand gallon of 2% was $4.74. A gallon of namebrand Whole Milk was priced at $5.18 so I guess we're there already. >>
I cant believe how milk has exploded in price over the last year - was paying around $2.85/gal - now over $3.50 and rising (live in Wisconsin) - the Feds say inflation isnt here yet, but I see it all around me in hard and soft goods - its going to get a lot worse before it gets better - I predict $1000/oz gold by next year - and I wonder if John Q Public even knows what's coming??
currently putting together a EF/AU/BU 18th & 19th Century Type Set; and CC Morgan Set
just completed 3d tour to Iraq and retired after 28+ years in the US Army
America (and Boeing, Microsoft, Google, United Technologies, Goldman Sachs, McDonald's, Coca-Cola and a hundred other world-beating U.S. companies) ain't going anywhere.
Note that Merrill Lynch, Bear Sterns, Citigroup, JPM, and others are not mentioned. I believe these financial companies will be spanked royally. Some will not survive. GS is weathering the storm because they shorted the very derivatives they created and have benefited somewhat from this carnage. Thier direct link to the USTreasury is certainly a nice trading aid (lol).
However, this is starting to look like a replay of the 1970s. An unpopular and expensive war, high fuel prices, weak dollar. But even bad times contain a lot of buying opportunities. I will repeat what I've said before - the buying opportunities lie in those things that have gotten hammered in price in last few years. That doesn't include PMs or commodities. Those profits have already been made by folks smart enough to buy from 2000 to 2003.
Not so. Gold, gold stocks and gold coins were "hammered" back to $650 in August, thereby creating a 20% to 50% discount buying opportunity. A number of generic US gold coins fell back 30%. In fact they were back to the same levels when gold was under $500 and even $400 in some cases. There were easy profits to be taken as soon as last August. With that logic, the "easy" profits in the Dow, S&P, oil, etc are now years past. Why should people even bother with them? Yet most still do.
O.K. Dave it’s not fair to get technical on us with out an explanation? >>
I posted a similiar chart in early Sept. >>
PLease help some of us who have no clue at what we are looking at with the chart I would love to know what it means.
Matt >>
The chart is of the "much maligned" Silver ETF. It appears to be breaking out after an 18 month consolidation.
The similiar chart I posted 2 months ago was of gold as it was breaking out near $700. That advance has been nearly 20% in 2 months. Trading in silver is usually much more volatile than gold. You can do the math.
I am wondering when to sell. A friend of mine who is a currancy trader for Nike says stay in anything betting against the dollar right now. Its tempting sitting on such profits right now. Sell and start buying land?
As we all know, it’s a really bad sign when the establishment starts telling the public what insiders like Jim Sinclair have been saying.
Everybody in the stock market needs to be very selective on what they are buying, and get a firm hold on their retirement savings.
Keep in mind we have yet to see the other types of derivatives go in the toilet!
At 3:45 a.m. Texas time gold is $844, Silver is $16.10 and oil is at $98.43 overseas.
Markets fear banks have $1 trillion in toxic debt By Sean O’Grady, Economics Editor Published: 06 November 2007
A new phase in the credit crunch, one of “$1 trillion losses” seems to be dawning. The crisis at Citigroup and renewed doubts about some of the world’s leading banks disquieted stock markets on both sides of the Atlantic yesterday, with the fractious mood set to continue.
Bill Gross, the chief investment officer of Pacific Investment Management, said US mortgage delinquencies and defaults would rise in 2008. “There are $1 trillion worth of sub-primes, Alt-As [self-certified] and basically garbage loans,” he said, adding that he expects some $250bn in defaults. “We’ve only begun to see the pain from rising mortgage payments,” he added. Brian Gendreau, an investment strategist at ING, commented: “Financials are 20 per cent of the S&P 500 and if that sector doesn’t do well all bets are off. People just don’t know what’s on the balance sheets.”
I'm hoping I get to ten thousand posts before your thread gets to five thousand.
Buy on the dips, don't use equity in your home to buy toys, use it to hedge inflation with gold or silver. The beauty of predicting very little and watching very much is that a pattern begins to develope that rides the tides of WORLD news.
People always have to eat. How much will a loaf of bread cost ? A: An ounce of gold ?
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latest news [FNM] NY wants Fannie, Freddie data on Washington Mutual CURRENCIES Dollar stumbles to new lows on call for China sales Gold futures climb to nearly $850 an ounce; crude vaults above $98 a barrel By Steve Goldstein, Market Watch Last Update: 11:43 AM ET Nov 7, 2007Print E-mail Subscribe to RSS Disable Live Quotes SAN FRANCISCO (Market Watch) -- The already stumbling U.S. dollar fell to new lows on Wednesday, after a top Chinese official called for the country to shift more of its huge foreign-exchange stockpiles out of the beleaguered greenback. Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying that China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar. He also said that a rapid appreciation of the yuan -- as Washington and increasingly Europe are requesting -- is not necessarily the right move, though Cheng insisted the country wasn't actively seeking a major trade surplus. Cheng "has in the past made errant remarks that have no bearing on policy," according to Marc Chandler, currency strategist at Brown Brothers Harriman. Nonetheless, the reports sent the dollar into a tailspin. The buck plunged to new lows against the euro, with the shared currency surging as high as $1.4730, compared with $1.4559 late Tuesday. The British pound surged to $2.1070 -- the first time sterling has broken $2.10 since May 1981 -- from $2.0866. Even the Japanese yen also rallied, with the dollar falling as low as 112.76 yen from 114.71 yen. Gold futures, which traditionally move in the opposite direction to the dollar because of their role as an inflation hedge, surged to their highest level since 1980 on Wednesday. Gold for December delivery rallied $14.60, or nearly 2%, at $838 an ounce on the New York Mercantile Exchange. See Metals Stocks. Crude futures also surged, marking a fresh record at $98.62 a barrel Wednesday, propelled by expectations of a sharp drop in supplies. See Futures Movers. "As if ballooning U.S. credit/housing crunch data, back-to-back Fed cuts and soaring oil prices weren't enough to stun the U.S. dollar, now we have the specter of central-bank reserve asset diversification out of U.S. dollars to contend with," wrote Vincent Chaigneau, the head of fixed-income and foreign-currency strategy at Societe Generale, in a note to clients. The dollar plumbed fresh lows after news that U.S. productivity jumped 4.9% in the third quarter, the fastest pace in four years. See more on U.S. productivity. The weakening trend accelerated from September, when the Federal Reserve began cutting interest rates due to the credit crunch. The euro during August traded as low as $1.3417. Steve Goldstein is Market Watch's London bureau chief.
I doubt China would dump its US currency holdings and thereby incur enormous losses, unless there was some huge political benefit to them from doing so. The only one even I can think of would involve China seeking to leverage those US dollar holdings to keep us out of a conflict with Taiwan, but that doesn't seem to beon the horizon.
I just don't see the political advantage and the economic losses to them would be enormous. Anyway, given that the 2008 Olympics are in China next summer, I seriously doubt if China wants to invite those kinds of problems and that kind of scrutiny right now.
"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)
Comments
<< <i>Right now the dollar is cheap... very cheap, and commodities, most foreign currencies, and PMs are very expensive. Eventually, this cycle will reverse itself.
I remember back in 2000 / 2002 when a dollar was worth about about 1.15 euros and everyone was talking about how the European economies are so stagnant, they have bad demographics, too much red tape, etc. Fundamentally -- and I don't want to sound pollyanish here -- but not much has changes except the media hype. A major report came out yesterday confirming that our economy is the most competitive in the world. Our worker productivity level is the highest in the world. Our budget deficit and our trade deficit is shrinking, too. The stars have been aligned against us for a long time, but the situation will eventually turn. Bush is only in office for 1 more year, and after that, no matter who is in there, our reputation in the world is bound to improve.
However, the US dollar lags all those indicators. Good editorial in the Wall Street Journal a few days ago making these points and suggesting that we will see a rise in our currency in the medium term. Like Codohk, I am bullish about our future. I don't have a dog in the PM fight, but if I did, I would have cashed out my huge profits and waited for the next big opportunity. >>
IMO, everyone has an opinion - but dont base your thoughts on The Wall Street Journal - of course they are going to pump up the economy and the dollar - their life blood is based on a strong and robust Wall Street - I would like to be bullish on our future, but with all of the greed, deceit and lying in the corporate world this ecomomy is going down big time - it's time to pay the piper - when a fired CEO gets paid 160 million, leaving stockholders with the bill, I lose all faith in the corporate world - will the economy come back - my guess is as good as yours, but in the interim, protect yourself by hedging with PM until this storm is over - GO GOLD!!!!!
just completed 3d tour to Iraq and retired after 28+ years in the US Army
$850 27 years ago so that's actually old ground. Question is, where will the cartel try again with all their efforts to turn gold sharply?
Probably a fight at $850-$875 but I still don't count that as true resistance. Wait until over $1000. That could be as early as this spring.
Friday closes were strong during the Sept 2005 - May 2006 runup. And similarly Friday's have been strong on this last run up from $675 as well.
roadrunner
RR,
I guess no pullback huh?
Mr. Sinclair is even more worried this week read below, but here is something interesting from an old article several years ago.
“Sinclair has always stood apart from the crowd. On the walls of his office hang six photographs of Shri Sathya Sai Baba, a guru in India whom Sinclair visits several times a year.”
So the question is, is he getting inside info. from the Astral Plane through his teacher?
“This is quite serious because the message is not Citicorp or Merrill, but another derivative soon to be tested and soon to fail: credit default derivatives. Lets pray it does not get out of hand in 2007-2008. Be prepared for major geopolitical disturbances in 2010 which when added to a massive monetary inflation will do things even the out of control gold guys do not anticipate. They do not know. I do."
This is it!!
What has not been discussed though is that Europe and parts of Asia are going to suffer the same Real Estate crisis and the problems that come with it. Already in New Zealand people can not afford to buy real estate. If there are no buyers, well, I think we know what happens next. New Zealand has been a major cause of the carry trade problem. They will enter a recession soon and have to lower interest rates. This will spread to Australia, Malaysia, Indonesia and then to Europe. China can not sustain its growth rate and will begin to slow. Demand for capital will dry up---some will evaporate. Global interest rates will begin falling.
Knowledge is the enemy of fear
Credit defaults are in the dozens of $ TRILLIONS for starters. Interest rate bets are in the hundreds of $$ TRILLIONS. This is what Sinclair has been preaching for years, the true big picture of major bank and financial institution credit. If the end payer goes upside down, then who pays off the original bet? It gets real ugly from there when talking $450 TRILLION in total derivatives, of which most is unregulated and improperly valued by both ends of the transaction. Up to now, everyone won. Now that regulators are looking into valuing this swill, they will find almost no value to it.
Merrill Lynch may be hanging by a thread after an 8% loss today.
The FED's injection of $41 BILLION today indicates something is not right at all. That coupled with the 1/4% rate cut is a huge change.
That injection is the largest since Sept 2001 following 9/11. Bank of America has closed its gold trading desk....not profitable enough.
Everything is certainly rosy in bankland.
roadrunner
To help some of the new members here, that may want to buy some bulk gold and silver coins. Would some of our more experienced traders please list some of their dealers they do business with.
I know that many of these recommendations are scattered out in this thread but might not be easy to find now.
Lets help some of our new brothers and sisters here, by giving them some names and website addresses of those bullion dealers that we know to be honest to deal with and that offer the best prices.
Thanks Terry
Government debt. From the news accounts you would think our government was absolutely bankrupt. I don't deny that our debt is way too big for my tastes. Even after Bush's profligacy of the last 6 years, however, the public debt of the US compared with GDP is (relatively) not bad. In fact, we are only #31 on the list when you look at the debt in proportion to the size of our economy. Our existing government debt is about 65% of GDP. LINK. By contrast, Japan is #2 on the list and has government debt equal to 176% of GDP
Second, let's say we have a recession. Economy might contract 1% or 2% as it did the last few recessions. What does that mean in the big picture? Our GDP is currently about $13.1 trillion. That means our economy in a recession is still producing about $12.97 trillion in output (if the contraction is 1%) or $12.84 trillion (assuming a 2% contraction). Not great, but compared with the "sky is falling" news coverage that you will see, it puts the figures in a very different perspective.
You might laugh but since we're talking with new posters...DoYourOwnDamnDueDiligence guys and gals. If you want free advice with gold...that's not a good way to start. Secondly, I'm not a gold bar guy, I like US numismatic bullion as PM. US because if we're in the US and if we're trying to sell foreign numismatic bullion then me personally sees that there may be some compromising situations where your foreign numismatic bullion may not be quite as desirable. It was also protected in the '33 recall (although limited as to personal holdings). Exchange traded funds are not my way either though I do own a little mining stock just for a play. And, I'm not a kind of guy that runs out 10K's or something in a big splurge, I'm an accumulator...an oz here, couple of oz's there, nice coin here, pick up at a show...nice and easy does it, never stretch (well maybe a time or two). So, numismatic bullion is the way I play.
The US Mint is a good place to get started. I normally don't like to buy gold from websites but I am very comfortable with Heritage and with the US Mint. US Mint charges no insurance and lately, they have been just over spot by a few buks as opposed to Kitco who is getting $42 and change over spot and that's well before you get to shipping charges and other expenses from other websites. For example, US Mint GAE oz is $831 right now with $5 shipping and it is insured by the US Mint at no charge to the buyer. Hard to go wrong with US Mint issued numismatic bullion and who knows, you might just get lucky and catch some anomalie that leads to a short mintage. The other thing about the US Mint is that if your package is lost in the mail...hey, they send you another one, no BS.
Heritage is good because you have a good selection of products. The buyer's fees are kind of stiff as is shipping and insurance but if you're buying more numismatic than generic gold coin, there are some extra expenses that you just have to deal with because you're shopping at home.
By far, the best recommendation for buying bullion is wait for or go to a local/regional show. Meet the seller, hold the coin/bar, make a deal, put it in your pocket and stick the receipt in another pocket with his card and walk away. No insurance, no postage, no buyer's fees, no BS. Later, you can give him a call and know what kind of deal you have here. So, if you are a new poster looking for information about buying gold coin or numismatic gold or bar gold...hey, go to a show, it's all good! So there you go, see you there (and don't be bidding on any '08-S $10's right now...I'm not done).
Coin ON!
U S mint,Teletrade, ebay(be careful,check seller feedback),bulliondirect and Tulving.com and monex, for bullion and numismatic bullion.
For numismatics Heritage, bowers and merena, superior , stacks and David Lawrence.
These are all great for accumulating physical assets.
Trading in and out of bullion fast in my retirement fund SLV, GLD,GDX on the stock exchange.
These boards have been a phenomenal resource as far as mint products go as well as teaching the pitfalls of numismatics. DO NOT believe for 1 second that the posters are financial advisors though and do your own due diligence.
The last 4 years have been amazing , a lot like the dot.com boom and property market in that you didnt have to be a genius to make a profit and this may change at any time.
Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects.
Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects.
How much is "too much?" For me, too much might be 70% of my net worth. For someone in a different situation, too much might be 15%. I could sell a bunch right now and cash out with some great profits. But why? In my opinion, everything else that I might buy would be of less value to me, and riskier too. And that is just my opinion.
I knew it would happen.
APMEX.com
Tulving.com (large minimums)
CNI
AJPM.com
Chard's website (in the UK)
are ones I have either ordered from or otherwise would have ordered from for bullion-esque type purchases.
The BST boards here are occasionally useful.
Anyone have any thoughts on Goldmoney.com? The James Turk website/offshore gold. It's not physical gold but not exactly what I think of when people talk about 'paper assets' either.
<< <i>I agree with everything that Joflax says, except this:
Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects.
How much is "too much?" For me, too much might be 70% of my net worth. For someone in a different situation, too much might be 15%. I could sell a bunch right now and cash out with some great profits. But why? In my opinion, everything else that I might buy would be of less value to me, and riskier too. And that is just my opinion. >>
I think that the financial advisors are touting 10-15% in hard assets.
I agree with you that everyone has their own risk tolerance and I feel that US stocks(except for multi-nationals), and the dollar are not the place to be right now. My tolerance is also much higher than 15% in this market but that can change in 15 seconds with the advent of the ETFs.
SecondRepublic
You know Sir it is not so much that the “Sky is Falling”, its how much can you trust those that are supposed to be your reliable information centers.
We all live in the United States of America and it’s a great country, with a good economy, and great hard working folks, but is there any doubt in anyone’s minds that our government, and many of our large financial intuitions, are constantly lying to us and taking advantage of the un-informed?
Not counting all the money stolen, or “borrowed”, from all the Federal trust accounts, our current debt on the books is now $9,080,228,573,291.65. This debt is now going up at a rate of between ½ and one trillion per year. If we have such a strong economy why is it that we never pay any of this debt down?
The reason of course is we cannot. Our current foreign monetary reserves that we could use to strengthen the dollar amount to $90 billion dollars while those of other large countries is in the trillions.
Our government, like many of our citizens, is simply spending beyond its capacity to pay.
Like Jim Rodgers said on many of the financial shows this weekend, “ If you want to continue to believe all these lies the Government, and the big money players on Wall Street are telling you, go ahead, but don’t complain when oil is at $150 a barrel, and your grocery bill is half of your take home pay.”
Don’t you think things are just a little out of whack when guys like Mr. Stan O’Neil can lose billions of dollars gambling with the publics money, and walk away with $160 million to retire on? How much do you think Mr. Prince will walk away with this weekend at Citi?
How many folks here have these, “Great” companies in their 401k’s and relied on these people to take care of their hard earned retirement money?
How many billions, if not trillions, of the publics dollars will be lost in the next 12 months.
<< <i>Do NOT put too much of your net worth into coins and bullion. Remember that it is not easy to liquidate physical PMs in a hurry, and you could get left holding the bag for some time if the market corrects. >>
How much is too much? It all depends on one's position in life. Current debt, family responsibilities, current income levels, etc. Too many variables to put a number on it. Each to his/her own.
A quick guestimate would put my PM holdings in the over 50% range and I'm adding to it over anything else right now. That's a tough figure to come up with as the housing market here is circling the drain, I don't even know what my home's value is. I know what it's appraised and insured at, but I really don't know what it would sell for and that's the true value of anything. I do know that the few homes that have sold have gone for as little as 55% of their appraised value, while some have brought as much as 80%. I also know there are for sale signs all over the place. When I bought here, a for sale sign was rare. Of the many places in Houston that I thought would be relatively safe from the housing bubble burst I knew was coming, this was one of them. In fact, if not for PMs, I wouldn't own the home I do. I can ride it out and in time I know I will walk away with a huge chunk of my retirement in hand from owning this home.
Been living with corrections for a long time now, if things like that bother you, stay out of PMs, particularly silver as she can be a cruel mistress.
OTOH, we are still in the first half of this bull, and just like oil isn't going to drop to $30 a barrel again, neither are PMs going to fall like that. Corrections are things that the short players have to worry about. Most of us are long and believe in holding physical as opposed to paper. In fact, many of us are here disdain the paper metals as they help the manipulators and hold prices down to unreasonably low levels. All the PMs should be much higher than they currently are, but then we know that this is and has been a manipulated market.
Slowly that sort of manipulation has been unwinding and we've been watching it with glee. I know I am. The house of cards is going to collapse, of that I have no doubt, tho only question is when, but we're getting closer and closer to it everyday. my guess is that in less than two years we'll look back at these current prices and smile and wish we could have invested more back when gold was "only" $800 and silver could still be grabbed for the incredible bargain of less than $15 an ounce. Just study the past charts for a little history lesson. Nearly all of the value in PMs comes in very short bursts near the end of the bull. Probably 80% of the gains are made in 2% of the time frame. That's just the nature of the beast, so when charts go vertical, don't spend a long time celebrating. Don't be buying then either. Even when a crash/correction comes, PMs are still going to have value and more than they have today. This isn't a paper dot.com sort of thing at all. We are talking real assets.
As far as liquidation goes, I doubt I'll do it all at once and just have to go with the gut feelings there. However, liquidation is no problem at all. I don't understand those who consider that an issue. I could do it all by Monday with a phone call this afternoon. I did it once already a few years ago when silver spiked up to $8 plus and it took less than 24 hours to sell 45,000 ounces of silver. I bought back in at a cost average of around $5 within a couple of months once the price had settled and the dust had cleared. People are like lemmings and act in a herd mentality, the trick is to relax and pick your spots. Sure, it takes a lot of study and a bit of luck. I can't count the number of people who freaked out during that big silver drop and sold out to me at spot or even less. They just couldn't take the volatility.
I suppose that it might depend on where one lives, but even then, if we're talking about a large number like many of us here. Something in the high 6 to 7 figures is certainly worth some phone calls and a drive. Call it a short vacation if you are way out in God's country, it's really not a big deal. I'm certain the next time I sell, it will be the last time. I'm thinking that time will be within the next 3 plus years or so. I doubt it will be much longer, but I can wait if need be.
I'm sure I'd have a tougher time selling my antiques than I would my PMs.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Matt
Antique Fishing Lures
Understand that one of the biggest factors in the GDP is the inflation deflator. If that is much understated, the GDP is way overstated.
And from what I've read, the GDP inflation deflator is further off than the CPI. This past quarter the net value used for inflation was something like 0.8%. Can you believe that? Inflation of < 1% for the 3rd quarter? I bet that would be news to most homeowners and shoppers. That helped boos the GDP to well over 3% which was remarkable considering how flat the economy actually is. It's all about manipulating the numbers. And hence we will be several quarters further along into a recession than ever before just because of the rigged numbers. If the masses are thinking recession they cannot continue mass consumption and borrowing as required.
Axestone's thread at GIM
Sure is a lot of heated talk today concerning Sinclair's recommendations from a week or two ago to get hold of one's stock certificates and hunker down for a while. It's hard to scare a gold bug but those guys seem rather concerned.
roadrunner
Citigroup taking an additional 8 - 11 billion loss.... on top of a previous announced loss.... and the CEO announced his 'retirement'......
CitigroupMess
Maybe they can jump the interest to 45% real quick and add a few dozen dollars to their "fee structure" before they are bought by some nice Indian company that takes the business to Bangalore.
Why not? They did that with Petrochina yesterday!
The Shanghai stock market, the greatest casino in the WORLD!
Nov. 6 (Bloomberg)
PetroChina yesterday almost tripled on its first day of trading in Shanghai, as shares surged to 43.96 yuan from the sale price of 16.7 yuan, giving the state-owned oil producer a greater market value than the entire Russian stock market.
China Struggles With Fuel Crunch, but Experts See No Change in Price Controls
BEIJING (AP) -- Bus drivers in the bustling southern province of Guangdong have a new daily chore: Hunting for diesel. Amid widespread shortages, service stations allow drivers just a few quarts at a time, forcing buses to stop repeatedly to fill up while passengers fume, said Dai Guowei, an employee of the Zhaoshang Passenger Transport Co.
While it's nice to book a win, methinks the advances are going to be neutralized at the pump and the grocery store.
“While it's nice to book a win, methinks the advances are going to be neutralized at the pump and the grocery store.”
Well said brother, all these gains in gold are great, but the lost value in other assets, take away many of these gains.
At least we have a chance to break even, the rest of the poor smucks, that have no idea what is going on are just taking a beating!
Knowledge is the enemy of fear
But, let me describe why in many ways I'm more optimistic now than I have been in quite a while:
(1) The derivative shake out that is now underway was all but inevitable, the only issue (which of course is not yet resolved) is the degree of the shake out, both from a perspective of the financial numbers and with respect to impact on the underlying "real" economy. ["real" in quotes, because it is a mistake to think that there is a well defined line between a real economy that produces things and an abstract economy on the books -- an economy is really just the sum total of what keeps us engaged in life -- when I say real I'm talking in a broad sense of real]
(2) In spite of apparently wacko valuations, things could have gotten much worse before the bubble began to burst or deflate. Perhaps the most important test of whether a bubble bursting will severely impact the real economy is whether resources have been grossly misallocated as a result of the bubble; after cleaning up balance sheets [personal and business], are economic structures flexible enough to allow a reasonably orderly reallocation of resources, especially human resources. My gut feeling is that yes, cleaning up after this bubble can happen in a reasonably orderly fashion.
(3) I think the bubble is bursting late enough that it may lead to a correction of imbalances in the global economy that are not sustainable long term [if the bubble made a little pop early on, and then kept growing, it would not do much to adjust imbalances], and early enough that the result will not be completely unpredictable and unmanageable.
(4) Without wanting sound like I have undue faith in the corrective powers of free markets, I believe most of the risks that exist are fundamentally political in nature, rather than economic, specifically:
(a) As apparent assets vanish from the balance sheets of financial institutions and other organizations, the effect is fundamentally deflationary. The Fed will and should move to counter this deflationary threat. It is probably relatively easy with our current knowledge of economics to prevent depression, but it is probably not easy to do so without overcompensating. From this perspective, I agree with the almost universal consensus on this list that increasing inflation is highly likely.
(b) Uncertainty arising from a range of issues (economy, likely change in the party in the White House, Iraq) increases the likelihood that politicians will want to effect change simply for the purpose of effecting change (for want of a better phrase, pandering to the public). There are some really big mistakes that could be made -- especially related to reigning in global free trade. While I personally believe that we should devote considerable energy to redefining the framework of global finances and trade -- the current scheme is far from perfect -- I think there is a real risk that half baked and ill-conceived measures will be implemented. In particular, poorly thought out protectionist measures could lead to a massive contraction in global trade. This could lead to near catastrophic instability parts of the world, and would lead further to dramatically increase inflationary pressures in the US. I don't think this is going to happen, but my general optimism is tempered by a concern over this possibility.
(5) The bottom line for the rambles above -- if we muddle along with decent but not exceptional performance from our bureaucrats, and our wonderful system of checks and balances can keep our politicians from making big mistakes, I'm not terribly worried about the emerging financial situation. It sure seems to point to higher inflation (and higher gold), but in terms of real wealth, Americans and the world are likely to be better off ten years from now than they are today.
<< <i> from what I've read, the GDP inflation deflator is further off than the CPI. This past quarter the net value used for inflation was something like 0.8%. Can you believe that? Inflation of < 1% for the 3rd quarter? I bet that would be news to most homeowners and shoppers. >>
I don't have a tremendous amount of confidence in the inflation figures, either, but keep in mind that core CPI excludes food and energy prices. There is both prices inflation and deflation happening simultaneously in the economy. A lot of things are more expensive than they used to be. However, some things are way cheaper than they used to be or you get a much improved product for the same price (electronics are the best example). I bought a car in late 2006 that cost me $8,000 less than the car I bought in 2001 (NOT counting inflation) and it's bigger, safer, and more powerful than what I used to drive.
We are not seeing the end of the world or anything that remotely warrants the type of panic a few folks are exhibiting on internet chat boards. America (and Boeing, Microsoft, Google, United Technologies, Goldman Sachs, McDonald's, Coca-Cola and a hundred other world-beating U.S. companies) ain't going anywhere.
However, this is starting to look like a replay of the 1970s. An unpopular and expensive war, high fuel prices, weak dollar. But even bad times contain a lot of buying opportunities. I will repeat what I've said before - the buying opportunities lie in those things that have gotten hammered in price in last few years. That doesn't include PMs or commodities. Those profits have already been made by folks smart enough to buy from 2000 to 2003.
yearly cash flow is in the purchase of cars and computers
and how much is in Gas, heating oil, rent, college tuition,mortgages,
health care, airfair and food?
Camelot
The replay started about 5 years ago.
Link
I got a note this morning that dirt company was raising their prices by 20% to cover the cost of diesel fuel.
Since every single thing we all buy is shipped from one place to another, I got to thinking!
If all the folks moving all the products from place to place increase the cost of shipping by 20%, then how much are all the product prices going to go up in the next few months?
I guess these geniuses in Washington think it is just great to have a cheap dollar so we can export more, but I am not sure they figured that even the Super Models have figured this out.
One Arab finance minister recently made the statement that with the current value of the dollar the price of oil should be $120 dollars a barrel. Remember a couple of years ago when everyone laughed at those who said oil is going to $100?
O.K. Dave it’s not fair to get technical on us with out an explanation?
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>"Its gonna get fun now."
O.K. Dave it’s not fair to get technical on us with out an explanation? >>
I posted a similiar chart in early Sept.
Knowledge is the enemy of fear
Camelot
And right you likely are.
My vote goes for milk to hit $5/gal. before gasoline but it's going to be a horse race. Gasoline prices are somewhat manipulated and can somewhat be managed but the cost of milk in a jug at the grocery in the cold case is going to be a pretty realistic figure and hard to manipulate or deny.
Member ANA, SPMC, SCNA, FUN, CONECA
FOR SALE Items
<< <i>
<< <i>"Its gonna get fun now."
O.K. Dave it’s not fair to get technical on us with out an explanation? >>
I posted a similiar chart in early Sept.
PLease help some of us who have no clue at what we are looking at with the chart I would love to know what it means.
Matt
Antique Fishing Lures
<< <i>Oil at $100 a brl is about $.15 a cup. You pay more for coffee and far less than those on the other side of the Atlantic that don't own oil. We are 30% more efficient at producing product for GDP than we were when oil spiked last. We can and will survive with oil much higher. Buy oil and gold if you want to preserve your wealth.
A gallon of cruide is not a gallon of usable refined product. It is remarkable how much the price of gasoline figures into inflating consumer goods and services, often multiple times based on component transport and fabrication. $100 oil is going to hurt if sustained. Maybe people can afford double the cost for the weeklt commutes but they might not be so comfortable when a lot of other things go up that they consume and cannot do without easily.
BTW, I am not in favor of buying big, integrated oil (like Exxon-Mobil). They start hitting their ceiling based on refining capacity and their margins must yield to the consumer at some point. The play, for me, is and has been in oil services, especially the ones who specialize in deep water. They also bite the big guys when they are in need.
NSDR - Life Member
SSDC - Life Member
ANA - Pay As I Go Member
<< <i>I'll have to vote for milk - I was in the local Walmart Supercenter this past weekend and the price for a Walmart brand gallon of 2% was $4.74. A gallon of namebrand Whole Milk was priced at $5.18 so I guess we're there already. >>
I cant believe how milk has exploded in price over the last year - was paying around $2.85/gal - now over $3.50 and rising (live in Wisconsin) - the Feds say inflation isnt here yet, but I see it all around me in hard and soft goods - its going to get a lot worse before it gets better - I predict $1000/oz gold by next year - and I wonder if John Q Public even knows what's coming??
just completed 3d tour to Iraq and retired after 28+ years in the US Army
Be careful. It might be made in China.
I'm not kidding. An enormous amount of food products are now cheaper to buy from China (altho typically not refridgerated items) Link
The local Stop & Shop just LOWERED their 1% gallon regular price to $3.79. I wonder how many more days before they quietly raise it back up?
Note that Merrill Lynch, Bear Sterns, Citigroup, JPM, and others are not mentioned. I believe these financial companies will be spanked royally. Some will not survive. GS is weathering the storm because they shorted the very derivatives they created and have benefited somewhat from this carnage. Thier direct link to the USTreasury is certainly a nice trading aid (lol).
However, this is starting to look like a replay of the 1970s. An unpopular and expensive war, high fuel prices, weak dollar. But even bad times contain a lot of buying opportunities. I will repeat what I've said before - the buying opportunities lie in those things that have gotten hammered in price in last few years. That doesn't include PMs or commodities. Those profits have already been made by folks smart enough to buy from 2000 to 2003.
Not so. Gold, gold stocks and gold coins were "hammered" back to $650 in August, thereby creating a 20% to 50% discount buying opportunity. A number of generic US gold coins fell back 30%.
In fact they were back to the same levels when gold was under $500 and even $400 in some cases. There were easy profits to be taken as soon as last August. With that logic, the "easy" profits in the Dow, S&P, oil, etc are now years past. Why should people even bother with them? Yet most still do.
roadrunner
<< <i>
<< <i>
<< <i>"Its gonna get fun now."
O.K. Dave it’s not fair to get technical on us with out an explanation? >>
I posted a similiar chart in early Sept.
PLease help some of us who have no clue at what we are looking at with the chart I would love to know what it means.
Matt >>
The chart is of the "much maligned" Silver ETF. It appears to be breaking out after an 18 month consolidation.
The similiar chart I posted 2 months ago was of gold as it was breaking out near $700. That advance has been nearly 20% in 2 months. Trading in silver is usually much more volatile than gold. You can do the math.
Knowledge is the enemy of fear
As we all know, it’s a really bad sign when the establishment starts telling the public what insiders like Jim Sinclair have been saying.
Everybody in the stock market needs to be very selective on what they are buying, and get a firm hold on their retirement savings.
Keep in mind we have yet to see the other types of derivatives go in the toilet!
At 3:45 a.m. Texas time gold is $844, Silver is $16.10 and oil is at $98.43 overseas.
Markets fear banks have $1 trillion in toxic debt
By Sean O’Grady, Economics Editor
Published: 06 November 2007
A new phase in the credit crunch, one of “$1 trillion losses” seems to be dawning. The crisis at Citigroup and renewed doubts about some of the world’s leading banks disquieted stock markets on both sides of the Atlantic yesterday, with the fractious mood set to continue.
Bill Gross, the chief investment officer of Pacific Investment Management, said US mortgage delinquencies and defaults would rise in 2008. “There are $1 trillion worth of sub-primes, Alt-As [self-certified] and basically garbage loans,” he said, adding that he expects some $250bn in defaults. “We’ve only begun to see the pain from rising mortgage payments,” he added. Brian Gendreau, an investment strategist at ING, commented: “Financials are 20 per cent of the S&P 500 and if that sector doesn’t do well all bets are off. People just don’t know what’s on the balance sheets.”
Buy on the dips, don't use equity in your home to buy toys, use it to hedge inflation with gold or silver.
The beauty of predicting very little and watching very much is that a pattern begins to develope that rides the tides of WORLD news.
People always have to eat. How much will a loaf of bread cost ?
A: An ounce of gold
Dollar tailspin
Ok it won't let me post the lind so I put in a space between market and watch to view this artical.
Fed The Election
latest news [FNM] NY wants Fannie, Freddie data on Washington Mutual
CURRENCIES
Dollar stumbles to new lows on call for China sales
Gold futures climb to nearly $850 an ounce; crude vaults above $98 a barrel
By Steve Goldstein, Market Watch
Last Update: 11:43 AM ET Nov 7, 2007Print E-mail Subscribe to RSS Disable Live Quotes
SAN FRANCISCO (Market Watch) -- The already stumbling U.S. dollar fell to new lows on Wednesday, after a top Chinese official called for the country to shift more of its huge foreign-exchange stockpiles out of the beleaguered greenback.
Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying that China should shift more of its $1.43 trillion of currency reserves into "stronger currencies," such as the euro, to offset "weak" currencies like the dollar.
He also said that a rapid appreciation of the yuan -- as Washington and increasingly Europe are requesting -- is not necessarily the right move, though Cheng insisted the country wasn't actively seeking a major trade surplus.
Cheng "has in the past made errant remarks that have no bearing on policy," according to Marc Chandler, currency strategist at Brown Brothers Harriman.
Nonetheless, the reports sent the dollar into a tailspin.
The buck plunged to new lows against the euro, with the shared currency surging as high as $1.4730, compared with $1.4559 late Tuesday.
The British pound surged to $2.1070 -- the first time sterling has broken $2.10 since May 1981 -- from $2.0866.
Even the Japanese yen also rallied, with the dollar falling as low as 112.76 yen from 114.71 yen.
Gold futures, which traditionally move in the opposite direction to the dollar because of their role as an inflation hedge, surged to their highest level since 1980 on Wednesday. Gold for December delivery rallied $14.60, or nearly 2%, at $838 an ounce on the New York Mercantile Exchange. See Metals Stocks.
Crude futures also surged, marking a fresh record at $98.62 a barrel Wednesday, propelled by expectations of a sharp drop in supplies. See Futures Movers.
"As if ballooning U.S. credit/housing crunch data, back-to-back Fed cuts and soaring oil prices weren't enough to stun the U.S. dollar, now we have the specter of central-bank reserve asset diversification out of U.S. dollars to contend with," wrote Vincent Chaigneau, the head of fixed-income and foreign-currency strategy at Societe Generale, in a note to clients.
The dollar plumbed fresh lows after news that U.S. productivity jumped 4.9% in the third quarter, the fastest pace in four years. See more on U.S. productivity.
The weakening trend accelerated from September, when the Federal Reserve began cutting interest rates due to the credit crunch. The euro during August traded as low as $1.3417.
Steve Goldstein is Market Watch's London bureau chief.
I just don't see the political advantage and the economic losses to them would be enormous. Anyway, given that the 2008 Olympics are in China next summer, I seriously doubt if China wants to invite those kinds of problems and that kind of scrutiny right now.