If PM's haven't moved significantly higher by now.....

konsole

what chance do they have when the economy starts to recover and the stock market finds a bottom and starts another bull run?

Bobk

konsole, that recovery may be a ways off, quite a ways. I belive PMs will come into there own.

konsole

<< <i>konsole, that recovery may be a ways off, quite a ways. I belive PMs will come into there own. >>



It may be a long time if and when the economy starts to recover and the markets aim higher, but things have been pretty bad now for a good while and pm's have done nothing but fall or stagnate. I feel as much as the next precious metals bull in here that pm's will be higher at the end of this whole mess, but it is a bit unnerving how they have responded so far.

adamlaneus

My ignorant viewpoint:

Probably the best thing for metals would be the following:

Regulations are created, due to recent events, to require reserves for certain things that currently have no regulations nor reserve requirements.

If we suddenly have a reserve requirement where there was not one before, it seems to me that will create a gigantic demand. That would probably have to be done carefully and gradually so as not to cause further disconnects.

Certain markets could not have grown to the size they are without a 'zero regulation/zero reserve' situation. I wonder how likely it would be that this problem would be corrected by requiring some reserves rather than none?

57loaded

<< <i>My ignorant viewpoint:

Probably the best thing for metals would be the following:

Regulations are created, due to recent events, to require reserves for certain things that currently have no regulations nor reserve requirements.

If we suddenly have a reserve requirement where there was not one before, it seems to me that will create a gigantic demand. That would probably have to be done carefully and gradually so as not to cause further disconnects.

Certain markets could not have grown to the size they are without a 'zero regulation/zero reserve' situation. I wonder how likely it would be that this problem would be corrected by requiring some reserves rather than none? >>



i feel pretty ignorant, too....and have held that same thought...

ARCO

<< <i>what chance do they have when the economy starts to recover and the stock market finds a bottom and starts another bull run? >>



That is my thought too. If a global crisis unprecendented in our generation is transpiring the world wide, and gold sells off $75.00 bucks, and cannot break above $900-$1,000 despite our goverment racking up trillions in debt (which is truly inflationary), then what is going to happen in prosperity?

It seems to me that Gold is useful for one and one only hedge, because it ain't inflation...it would be the complete collapse of the dollar which is the world's reserve currency. Still, I love that gold stuff and like to hoard it for reasons unknown to me.

Tyler

roadrunner

Give it another 1-4 weeks and we'll see if the metals respond to what the economy is saying. The hedge funds certainly aren't as prominent in gold as they were. Another source of buyers will be needed from here.

roadrunner

MoneyLA

I have to agree with those of you who think that the metals have had their run.

even with all of the grief in the economy now, gold is having a problem staying above 900 an ounce, and 1000 an ounce (reached in March) is becoming a distant memory.

gold and silver and platinum right now are victims of the "world wide liquidation," if we can call it that.

once the liquidation is over, and if inflation returns, the PMs might have another run up.

But from what I am hearing, the "re-inflation stage of the economy" might be three to five years away.

the question now becomes, do you want to accumulate the PMs over the next three to five years, or hold on to what you've got for the next three to five years.

As Ive said here many times, gold (in particular) is in a trading range of 800-950 and I am now starting to think that the trading range might be contracting slightly to 800-900, but I have not said that yet on TV or on my web site --- Im just starting to think abouit it.

mhammerman

$ in LA, seems like you are thinking just fine, keep going.

"...the question now becomes, do you want to accumulate the PMs over the next three to five years..."

Sure

MoneyLA

if price remain stable or in a narrow range, the idea about accumulation might work. but what about the risk that gold/PMs prices might drop dramatically? how much risk are you willing to accept? what are your parameters?

renman95

Without knowing what M3 is how can the markets know how fast money is being printed/inflated. It can still be calculated but it's very tedious. I'm sure M3 was no longer deemed important to report 2 years ago just like it's not really important to show the nation's budget...with social security, prescription drugs, and others factored in.

If the sheeple knew they would be scared.

Ren

Deadhorse

I believe we are in a deflationary period, call it stagflation if you will.

Such times are always followed by massive inflation.

I'll keep the hoard and add to it over time and watch, very carefully.

I don't, for a minute, believe this bull run is over.

Gold and silver will reach levels that would be laughed at around here right now.

It may take a few years, but I think more like 18 months.

This current mess is artificial, caused by our politicians and the loosening of regulations.

Once we dig out, it's off to the races again.

I think the market is still due for far more losses in the short term.

MoneyLA

I found this article fascinating, about how M3 is no longer published by the Fed. If M3 were available now, it would show the true damage from this market meltdown.

here is the llink to the article about how M3 is no longer reported.

by reading the definition of M3 you can just imagine how this measure of the money supply has shrunk in the past couple of weeks, ensuring a deflationary economy even a recession or worse, and certainly no incentive for the PMs to rise because the inflationary pressures are gone.

however, while inflationary pressures might be wiped out, the "fear factor" might give the PMs some legs.

mhammerman

"how much risk are you willing to accept? what are your parameters?"

Fair question...

amount of risk: risk is growth; more risk, more growth or maybe destruction. Less risk, less growth and less opportunity for failure. Some risk is necessary but how much are you willing to accept? I think losing 20% because of adverse circumstances is tolerable just as I would be looking to take a little profit if something realized a 20% gain but I could see 25% and probably still be fairly comfortable.

What are your perameters: Same as ever, 20% diversified across 5 major areas; metal/coins, cash, realestate, equities, and bonds/instruments. Within each 20% there are different risks such as with coins, some will gain with time because of rarity/demand and some will always just be bullion in a slab so some sure winners like early C and D eagles/half eagles with a couple that might go such as the fractional buffalos or George Washington Spouse would represent my concept of risk, especially if you throw in a bunch of '08 SAE's. You spread across the whole risk-scape and the fun is in working it out so you feel comfortable with your position. Basically, the same approach to stocks...a couple of 50 cent stocks with some that throw off dividends small banks, stuff like that make a good mix, in my mind. Just work that plan across the 5 sectors and there's your perameters.

Now, with the goofiness that is going on now in the world economic landscape, it's more interesting trying to keep yourself in a position you are comfortable with. While I like to have confidence in my position, you also have to not love it too much especially if it don't love you back.

MoneyLA

I have a different strategy when it comes to investing, and I learned this when I learned technical analysis back in the mid 1980s.

I learned this from the master of technical analysis Stan Weinstein.

Stan said "don't try to buy low and sell high. Instead, buy high and sell higher."

I have always followed that advice.

I look for strong uptrends and jump on a strong up trend.

I do not try to buy low, because you never know how low is low.

I would rather let someone else buy at the low, but give me enough momentum to buy on the way up.

this is why I am looking for a new bull run in gold before buying into gold again.

I caught the last rally just right. I did not buy at the low, but I caught a run that tripled my money and sold at 945.

I do not want to buy low because I dont know how much time I will spend holding gold at those low levels.

If I buy on the way up, I will be able to sell should the rally stall or lose momentum and can avoid losses that way.

simply: I do not buy and hold, I buy and sell with the upside. I dont try to sell at the absolute top either... I leave some profit for the next guy.

it's worked for more than 20 years with all sorts of investments.

roadrunner

by reading the definition of M3 you can just imagine how this measure of the money supply has shrunk in the past couple of weeks, ensuring a deflationary economy even a recession or worse, and certainly no incentive for the PMs to rise because the inflationary pressures are gone.

M3 may have shrunk somewhat in past months, but within recent weeks with all the FED and Treasury shenanigans (ie loans), it is literally off the charts. We've basically just done 2 years of "normal" M3 increase within weeks....and no end in sight to "free" money and "revolving door" loans. And if you toss in the real costs of AIG, Fannie-Freddie, and other nationalized firms/banks, M3 will be hard to keep up with. But at least the FED is saving a Million $$ per year by not having to calculate it.

roadrunner

MoneyLA

roadrunner, I think you have it backwards. the markets have lost more value than the Fed and all the governments have given in assistance. this is why there is a "crisis." there has not been enough government aid.

however, if indeed the governments of the world come up with more money than has been lost in the markets, we will have a violent inflationary cycle which will boost the precious metals.

so far, though, everything continues to point to deflation, with oil sinking, commodities sinking, and yes even gold and silver and platinum off their recent highs.

this can all change if some massive government aid is thrown into the mix.

that is what we have to watch for.

Cladiator

I buy/hoard silver/gold to keep it forever. Honestly don't plan on ever selling. The thought of my children being awarded a massive pile of precious metals decades from now always puts a smile on my face. They can do with it what they please. I'm sure they'll tell their kids about crazy Grampa's stash time and time again.

Deadhorse

Just relax.

We are currently in turmoil.

Metals prices are going to begin their steady rise again in due time.

It's only been a few months, just be patient.

TPTB are doing their best to depress them, but you can't keep the cap on forever, not with the demand that is there currently.

ProofCollection

It's not uncommon for a market to act such as to discourage bulls and put doubts into everyone's mind... right before it takes right off again.

Bull markets usually do not *start* when everyone is expecting one to start, and the converse is also true.

jmski52

Yep, it's a tough call. But I'd much rather have depreciating precious metals than worthless paper.

phantom1701

Well, what we saw last week was a sell off of all types of investments and holding. Stocks, bonds, PM's, oil, and other commodities...everything was for sale as investors were trying to convert to cash. This was because cash seemed like the safest "investment" or holding for most people while the paper markets were crashing.

Keep in mind that in order for PM's to climb the overall market still has to be stable and the dollar has to be weak with inflation on the rise. If we end up with a panicked market like we saw last week people are going to sell whatever they can in order to get the good ole' greenbacks, even gold and other PM's which are traditionally hedges against weakness in the paper markets.

What has become very apparent to me while watching all of this happen is that the big "crash" that many PM investors like myself see coming down the road in the paper markets may never actually come. Even though we have rampant deficit spending predicated upon a fiat monetary system it's clear that the FED is ready to fly in and bail out Wall Street and the paper markets at a moment's notice. So I'm starting to wonder what the future of the metals markets will be. If gold can't increase significantly or even hold it's value during a period of economic crisis, then it may never be looked at by mainstream investors they way the goldbugs look at it. Therefore it may never truly be the hedge we expect it to be in uncertain times.

Add to that now that our banks are going to be owned by the FED means we are moving closer and closer to a socialist state everyday.

fishcooker

This was because cash seemed like the safest "investment" for most people...


That reasoning didn't apply to this guy!


OKLAHOMA CITY, Oct 10, 2008 (BUSINESS WIRE) -- Chesapeake Energy Corporation (NYSE:CHK) today disclosed that its Chief Executive Officer, Aubrey K. McClendon, involuntarily sold substantially all of his shares of Chesapeake common stock over the past three days in order to meet margin loan calls.

Mr. McClendon commented, "I am very disappointed to have been required to sell substantially all of my shares of Chesapeake. These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis."

roadrunner

Considering the amount that oil and other commodities have been pounded, gold has held up far better. Hence it is doing the work of something other than just a commodity...ie a currency alternative. Considering also that paper gold stocks (HUI and XAU) were also halved while gold only fell 20% also leans towards physical gold doing its job. The US dollar is doing well now because of repatriation of deleveraging from overseas. One could call this a false rise in the dollar. Once the deleveraging from overseas calms a bit, watch the dollar reverse. Also note that foreign currencies in Australia, UK, Japan, China, etc are essentially close to all time highs compared to the gold price. For now, the USD is receiving some benefits that other currencies do not, but the time frame is not unlimited. In summation, US gold price is not doing bad at all esp with a little PPT battering tossed in.

roadrunner, I think you have it backwards. the markets have lost more value than the Fed and all the governments have given in assistance. This is why there is a "crisis." there has not been enough government aid. However, if indeed the governments of the world come up with more money than has been lost in the markets, we will have a violent inflationary cycle which will boost the precious metals. So far, though, everything continues to point to deflation, with oil sinking, commodities sinking, and yes even gold and silver and platinum off their recent highs. This can all change if some massive government aid is thrown into the mix. That is what we have to watch for.

Inflation has nothing to do with the losses in leveraged assets. Those future losses, even with the removal of the FASB 157 rule, will still exist on the bank's off-balance sheet and the other bankers will know it. Call it paper losses if you will. But the TRILLIONs being pumped in as we speak represents real money if put to use in some fashion other than banks writing more derivatives, naked shorting, or writing down against derivatives loss positions.

What if the price of a house fell from $400K to $200K? The owner is still paying on it as usual. He doesn't have to pay more. He may feel poorer but he still makes the same money at work, pays the same expenses each month, etc. So it's merely a paper value exercise. But let's say the FED decides to give the home owner $100K to spend because they feel sorry for the guy (or substitute a banker in this example). I'd say that's very inflationary and not deflationary at all considering the guy "lost" net $100K. You could write the same scenario with Funds, banks, etc with the same result. Worse yet, the banker can leverage up that $100K to $1MILL. Seems inflationary to me. Had the house still been worth $400K during the boom years the same owner could have taken out a $100K home loan and spent it. Would have the same inflationary effects as the previous example. He has $100K sitting around and he can spend it.

roadrunner

FullStrike

If we are continuing to import consumer goods, and oil, and shipping our jobs overseas, how can this economy boom?

All is just a paper cyclone of confusion until the actual reality sets in.