Fed cut 50 bps, gold flying

HonoluluDude

Wow. I didn't expect a 50 bp cut. Bye bye dollar.

Smittys

based on Kitco, there less tha two cents difference in the US & canadian dollar.....

Longacre

I hope the market goes up. I have a few options that I want to sell.

Doogy

i think our economy is going to be in for a bumpy ride these next 18 months. hold on!

Rarity

Lower interest rate translates to low inflation. Low inflation doesn't bode well for precious metal, does it?

Steve27

" Lower interest rate translates to low inflation. Low inflation doesn't bode well for precious metal, does it?"

Gold used to be a hedge against inflation, but in recent years, precious metals rise as the economy improves due to their use in industry.

HonoluluDude

<< <i>Lower interest rate translates to low inflation. Low inflation doesn't bode well for precious metal, does it? >>

Actually, you got that wrong. Rate cuts = sacrificing the dollar = highly inflationary. That's why you see gold up and the dollar down today.

OPA

<< <i>I hope the market goes up. I have a few options that I want to sell. >>




You got your wish...up by 250....Gold up by $10

57loaded

<< <i>

<< <i>Lower interest rate translates to low inflation. Low inflation doesn't bode well for precious metal, does it? >>



Actually, you got that wrong. Rate cuts = sacrificing the dollar = highly inflationary. That's why you see gold up and the dollar down today. >>



right

if money goe$ down inflation goes up

Enjoymint

<< <i>Lower interest rate translates to low inflation. >>



I thought the opposite was true.

DennisH

based on Kitco, there less tha two cents difference in the US & canadian dollar..... "

And that's where I'm headed tomorrow morning.

PerryHall

<< <i>

<< <i>Lower interest rate translates to low inflation. >>



I thought the opposite was true. >>



So did I.

ttown

<< <i>

<< <i>

<< <i>Lower interest rate translates to low inflation. >>



I thought the opposite was true. >>



So did I. >>



Come on let's no let facts get in our way.

plansim

> Lower interest rate translates to low inflation.

Nope. Lower interest rates are inflationary for a number of reasons.

The Fed uses higher interest rates to stop inflation if it rears its ugly head.

pharmer

Every possible prediction and it's polar opposite has now been made in this thread.

OPA

Kitco is having problems with the volatility.....


IMPORTANTue to technical difficulties Gold pricing being displayed is incorrect. We will not be able to honor any orders at this time. We are currently working on the issue and anticipate resolution shortly. We apologize for the inconvenience and appreciate your patience.

Coin Finder

Regardless, if you cash out on options, those dollars you get are worth less then they used to be worth.....

ttown

monex works.

Platinum is up to $1306 it maybe just a matter of time before the mint puts a freeze on the 2007 W UNC since they are tied closer to spot than the proofs.

57loaded

<< <i>monex works.

Platinum is up to $1306 it maybe just a matter of time before the mint puts a freeze on the 2007 W UNC since they are tied closer to spot than the proofs. >>



$749.40 gold american eagle spot.

HonoluluDude

IMHO, 50 bp cut is a panic move by the Fed. Something is seriously wrong in the financial/banking stratosphere, probably even worse than anybody suspects.

57loaded

<< <i>IMHO, 50 bp cut is a panic move by the Fed. Something is seriously wrong in the financial/banking stratosphere, probably even worse than anybody suspects. >>



ditto....

crito

As far as inflation goes it's the money supply, not interest rate that matters. Just so happens that when bankers are swimming in greenbacks they typically lend them out cheap. It's not a one to one correlation though.

Earendil

What does 50 "bp" stand for?

57loaded

<< <i>As far as inflation goes it's the money supply, not interest rate that matters. Just so happens that when bankers are swimming in greenbacks they typically lend them out cheap. It's not a one to one correlation though. >>



interest rate is the price of that money supply

aficionado

For inflation.

Think if you didn't have to pay interest on your house. What would you do with all that money. Spend it. Just like the First Spouses, (at first anyway), high demand produces higher prices, produces inflation.

Now if your interest rate doubled, your payment would go way up, you'd have no money to spend, nobody is shopping, like the First Spouses, prices fall, no inflation.

HonoluluDude

<< <i>As far as inflation goes it's the money supply, not interest rate that matters. Just so happens that when bankers are swimming in greenbacks they typically lend them out cheap. It's not a one to one correlation though. >>

Actually, it does matter. Why would foreigners want to hold or accept our dollars when it is in the process of collapsing? I am pretty sure they're not that stupid to want to hold on to a depreciating asset.

aficionado

<< <i>What does 50 "bp" stand for? >>



Half a percent. Fed fund rate was 5.25%, now 4.75%. If you have an adjustable rate mortgage, Home equity loan, credit cards, your rate will go down.

cohodk

Be careful what you wish for as OIL is also a beneficiary. For every dollar you make on gold you will spend 2 on gasoline and heating oil.

ttown

I have a feeling they might just rethink this when they meet again. Who knows they may have over cut just to increase it 25 BP to get a bounce.

RedTiger

There are a lot of cross currents mentioned by others. My bottom line is that at this time, I see the big rate cut as super bullish for gold. I am looking to possibly add to my longs, not take profits. I took a trading position in GLD about a week ago. This has a chance of being the "big one," for gold [a huge up move].

Mark Hulbert column at Market Watch reports that many gold newsletter writers have been cautious on this recent climb above $700, that adds to my bullish conviction. Several long time gold bulls here on the forum recently sold or have grown cautious. I predicted that kind of thing would happen when the express train left the station, that many would sell at close to the worst time in terms of percentage gains. Time will tell if this is an express train, or will run out of gas after a small move, or perhaps even a whipsaw to trap those like me. I do see a lot of ducks lining up for take off, lets see if they can go.

/edit typos

ttown

<< <i>Be careful what you wish for as OIL is also a beneficiary. For every dollar you make on gold you will spend 2 on gasoline and heating oil. >>


Man Gold's up 8 dollars, I sure don't want to see $20 a gallon at the pump

I'd say silver may benfit the most since it hasn't gone up like gold and is very cheap right now and way off it's high.

JustBustDimes

<< <i>What does 50 "bp" stand for? >>



bp: basis points.

1 bp = 1/100 of a %
50 bp = .5%

So, if the Fed increases the rates 25bp, the rate would increase by .25%.

Cladiator

Goobeldy goobeldy goobel gobble, shmoggel toggel.

mhammerman

"...doesn't bode well for precious metal, does it? "

Nope...gold only rose $7 on the news, was expecting much more. Maybe tomorrow.

pharmer

That makes as much sense as anything else said so far.

crito

If the bankers didn't have any money to lend you wouldn't be able to get a home loan or a credit card and there would be no inflation, even if the fed's rate was 1%.

It's the money supply that matters. Interest rates are just an indicator of how much excess capital they have.

PerryHall

<< <i>"...doesn't bode well for precious metal, does it? "

Nope...gold only rose $7 on the news, was expecting much more. Maybe tomorrow. >>



I think the market already anticipated this rate cut and the recient price increases in gold reflects this.

LALASD4

<< <i>IMHO, 50 bp cut is a panic move by the Fed. Something is seriously wrong in the financial/banking stratosphere, probably even worse than anybody suspects. >>



I agree with this. Something bad is out there that we don't know about yet.

mrearlygold

<< <i>Lower interest rate translates to low inflation. Low inflation doesn't bode well for precious metal, does it? >>



There's low inflation? LOL

57loaded

<< <i>If the bankers didn't have any money to lend you wouldn't be able to get a home loan or a credit card and there would be no inflation, even if the fed's rate was 1%.

It's the money supply that matters. Interest rates are just an indicator of how much excess capital they have. >>



if I am reading you right, you are still confusing money supply with cost of money.

mrearlygold

<< <i>Goobeldy goobeldy goobel gobble, shmoggel toggel. >>



Gort! Klaatu barada nikto!"

MacCrimmon

<< <i>

<< <i>If the bankers didn't have any money to lend you wouldn't be able to get a home loan or a credit card and there would be no inflation, even if the fed's rate was 1%.

It's the money supply that matters. Interest rates are just an indicator of how much excess capital they have. >>



if I am reading you right, you are still confusing money supply with cost of money. >>




Read up on Fractional Reserve Banking.........more dosh, by gosh.

PrivateCoinCollector

Thank God! I work for Countrywide.

lloydmincy

<< IMHO, 50 bp cut is a panic move by the Fed. Something is seriously wrong in the financial/banking stratosphere, probably even worse than anybody suspects. >>

Yea, Citigroup only made $21 BILLION EBIT last year. Maybe this year it will only be $15 billion. They seem to be really suffering!!!

Inflation IS low. Just because gas is up, it's NOT??? I'm in Michigan and California a quarter of the time, and Michigan, which is SUPPOSED to be suffering, still has the roads packed with giant SUVs as if gas is a buck a gallon. Same with California. I don't see a whole lot of suffering. The media says Michigan foreclosures up 80% in past year. OH NO!!!! But they should tell you, 1 in every 360 houses foreclosing. That my friend, is NOTHING.

Foreclosures on homes??? Simply homeowners that DIDN'T PUT ANY/MUCH money into the purchase in the first place walking away. I know of someone who bought a home w/nothing down, then refinanced, took out $30,000, house went down in value $100,000, and he walked away from it. (Ironically moved from Cali to Michigan). Bought a house in Michigan BEFORE any credit warnings. He will be a statistic of a foreclosure. BUT, he is LAUGHING AT the bank, and doing just fine. The bank gets stuck with his California house.

You can't believe half of what you read or what the media tells you. If the cost of owning a home IS GOING DOWN, isn't this DEflationary?

It's definitely NOT inflationary!!!

Eggs and Milk is priced the same as 5 years ago. Computers and other technological devices cheaper. Housing prices down.

Yea, inflation...

RYK

Eggs and Milk is priced the same as 5 years ago. Computers and other technological devices cheaper. Housing prices down.

I am not an inflation hawk, but when I do see three of my biggest expenses (education, health care, and insurance) go up substantially (high single digits), year after year, I have to question how we measure inflation. I would rather you doubled the price of my eggs and milk and kept the rise in cost of these three items to an increase of only 3%.

HonoluluDude

I'm not gonna get into the deflationary/inflationary religious war, because that's what it is-- religion. Believe whatever you wanna believe, but the bottom line is today's cut is significant as it is a "tell" about what's really going on. I think a run on banks is not out of the question at this point.

ziggy29

I don't think many "real world" families are feeling 2.5-3% inflation. The books are cooked.

As far as the relationship between inflation and interest rates, inflation largely tracks the *long* end of the interest spectrum. The short end looks largely at near-term economic and market considerations. When the market fears bad times ahead and a reeling stock market, scared money plows into money market funds and Treasury bills, thus increasing their price and decreasing their yield.

LALASD4

<< <i>I'm not gonna get into the deflationary/inflationary religious war, because that's what it is-- religion. Believe whatever you wanna believe, but the bottom line is today's cut is significant as it is a "tell" about what's really going on. I think a run on banks is not out of the question at this point. >>



A run on banks is already happening in England.

curly

All this fancy talk from you educated brothers surely causes ol' curly's head to spin. I guess I don't need all them dollars and goldy things. All Mrs. curly and I need is a plate of beans and biscuits and our love grotto to make us happy.

roadrunner

Glad that we have Lloyd to cheer for the positive spin on the economy. There's always good news in illiquid commercial paper, banks that can't do business with each other, and Trillions in derivatives looking for a place to flop (no one even knows the real size of how bad this is yet....and like everything else governmental, it will be hugely underestimated...that's what has the FED so scared....waiting for the next major fund/brokerage to go poof and freeze up all the illiquid paper once again). True, the PPI was positive today showing producer goods costing wholesalers less. Core inflation inched up a tiny bit. While the cost of beef, wheat, cheese, oil go up, some other things come down. But there's no mistaking the increases in rents, health care, education, taxes, etc. Someone must be thinking there is inflation in our economy or gold would never have gone from $260 to $723 over the past 6 years...and this in the face of major CB sales and ESF manipulations. All I know is that the size of a Chips Ahoy is a mere fraction of what it was years ago. Hmm, maybe the diameter of a Chips Ahoy (adjusted for chocolate chip density) should be a CPI input?

Several long time gold bulls here on the forum recently sold or have grown cautious. I predicted that kind of thing would happen when the express train left the station, that many would sell at close to the worst time in terms of percentage gains. Time will tell if this is an express train, or will run out of gas after a small move, or perhaps even a whipsaw to trap those like me. I do see a lot of ducks lining up for take off, lets see if they can go.

I've only seen the primary forum gold bulls add to their holdings in this past year. And in some cases in very significant ways. 16 months was plenty long enough to wait for gold to finally do something. And as Red Tiger said, too many ducks seemed to be lined up this time with the hedge fund fiasco's leading the charge.

roadrunner

HonoluluDude

<< <i>

<< <i>I'm not gonna get into the deflationary/inflationary religious war, because that's what it is-- religion. Believe whatever you wanna believe, but the bottom line is today's cut is significant as it is a "tell" about what's really going on. I think a run on banks is not out of the question at this point. >>

A run on banks is already happening in England. >>

Yes, I know about that. I meant in the U.S.-- A full blown banking crisis. It will make the S&L debacle in the 80s look like a walk in the park.