The trend is towards real money and not as much free credit. Might as well be pms. China and Russia agreed to use their currencies in bilateral trade today. It will probably hurt them more than the US, but it will hurt the dollar.
I can't think of any reasons that PC would be terribly wrong.
Q: Are You Printing Money? Bernanke: Not Literally
I hadn't paid that much attention to the CPI in recent years after figuring out that about half the index is essentially rigged. But that wasn't good enough for the BLS. They want to ensure that if the other half of the index spikes, that those effects are removed. If anything deviates much from it's seasonal tendancies, the Bureau of Labor and Statistics will smooth out that effect because it is "unnatural" and not conducive to a smooth trend. Included in these adjustments over the past 8 yrs include weather changes on crops (rain, dry weather, hurricane effects, etc), electricity demand changes, introduction of new car models and special financing incentives, water and sewer maintenance, rapid rise in educational books and supplies, etc. The CPI takes the stance that if an item makes an abrupt price change that is out of character, it needs to be smoothed out...hence an effective constant price index. So if for whatever reason food and fuel prices spike up, that's not legitimate and should be removed from the CPI. The CPI only wants to track items that are behaving properly. And as long as they do behave they will be well represented in the CPI.
Just remember if a drought or excessive rain causes a crop shortage to spike up the price of some of your favorite foods....it's not real per the BLS...also not real is the additional money you have to spend to purchase the product. The only thing that is real and bankable is a steady CPI (ie slow and steady wins the race).
a drought or excessive rain causes a crop shortage to spike up the price of some of your favorite foods....it's not real per the BLS
This is mostly correct, as those price spikes are often short lived and prices revert back toward levels. For example, corn traded between roughly $2.50-$3.50 for decades. It was only in 2007 when corn broke above $3.00 for a sustainable period. Why? Because of this http://en.wikipedia.org/wiki/Energy_Independence_and_Security_Act_of_2007
And once one food based commodity goes up, investors bid up prices of other crops, if for no other reason than they can. But more precisely, if corn is projected to be high, farmers will plant more corn and less wheat, soybeans, ect, which could cause a shortage of those crops and hence higher prices.
Do things cost more? Sure they do. Are people making more money? Yes they are. A problem only arises when prices rise faster than incomes. And for the past 30 years, food commodities have greatly underperformed salaries. Food costs are actually less a burden to J6P today, than they were 20 years ago. Now I know some will argue that restraurants costs more, but that is all due to labor related expenses. Others will say a box of cereal is smaller, perhaps, but the costs of the raw materials have not increased. The extra costs have gone to corporate profits, wages and benefits, legal issues, advertising, ect. So dont blame the FED for increased food costs. Instead, blame Congress for passing a stupid law, Kelloggs for taking advantage, speculators for seizing the day, unions for excessive wages and benefits, and ridiculous farm subsidies. All of those reasons can be controlled. Weather cannot.
Its not whether the politicians have the stones, but rather the American people. Of politicians I have no faith, in the people I have much. >>
That's because you're a softee and a homer. Much too sensitive
MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I was a bit distracted for the holidays, but I stand by my earlier calls on gold. $10-20 weakness is nothing. I'd be concerned if we'd closed below $1360, but we didn't. The Irish bailout should probably prompt dollar strength, but I don't know that this will translate into lower gold.
<< <i>Its not whether the politicians have the stones, but rather the American people. Of politicians I have no faith, in the people I have much. >>
Not sure how you figure. Like it or not, the politicians are in control and it will be another 2 years before we can do anything about it. The most recent election results won't translate into any tough measures being enacted or real solutions being implemented. The people can riot, but I just don't see any riots in support of higher interest rates or austerity measures becoming reality here or anywhere. From the polls I saw, 70%+ of the American people think and support radiating grandma and infants because they think it will keep us safe from terrorists.
Well the big up-move hasn't started like I had been expecting, but gold is making progress, however slowly. I can't complain about today's ~$5 gain. The short term charts are primed and ready to go though, so any bit of news should do it. But I am a little cautious here as Dec 1 is marked as a minor cycle top... Gold's move and stability is impressive (IMO) despite the dollar strength. Although it's not so much dollar strength as it is Euro weakness. In fact, euro issues with Ireland may put pressure on PMs, so that is another reason to be cautious, but I think it could actually cause some incredibly moves like we've rarely seen before, $50-100 days, as Ireland still has to vote on whether to accept the bailout or not.
Support for gold is at 1358.4, 1364.5, and resistance at 1374.6, 1380.7.
VIX chart showing an expanding wedge over the past 6 weeks and now running into the 200 dma.
Edit for end of day: there were junior miners breaking out all over the place today...kind of coincided with the 4% silver move. BVN, the one gold and silver miner that had been showing great resilience throughout this corrective period and had barely dropped off from its November peak fell back about 6% today while the other miners rallied. The cause: Peru mentioning that it was considering raising PM royalties due to the govt. All of BVN's major producing mines are in Peru. Ouch!
Comments
I can't think of any reasons that PC would be terribly wrong.
I knew it would happen.
I hadn't paid that much attention to the CPI in recent years after figuring out that about half the index is essentially rigged. But that wasn't good enough for the BLS. They want to ensure that if the other half of the index spikes, that those effects are removed. If anything deviates much from it's seasonal tendancies, the Bureau of Labor and Statistics will smooth out that effect because it is "unnatural" and not conducive to a smooth trend. Included in these adjustments over the past 8 yrs include weather changes on crops (rain, dry weather, hurricane effects, etc), electricity demand changes, introduction of new car models and special financing incentives, water and sewer maintenance, rapid rise in educational books and supplies, etc. The CPI takes the stance that if an item makes an abrupt price change that is out of character, it needs to be smoothed out...hence an effective constant price index. So if for whatever reason food and fuel prices spike up, that's not legitimate and should be removed from the CPI. The CPI only wants to track items that are behaving properly. And as long as they do behave they will be well represented in the CPI.
Just remember if a drought or excessive rain causes a crop shortage to spike up the price of some of your favorite foods....it's not real per the BLS...also not real is the additional money you have to spend to purchase the product. The only thing that is real and bankable is a steady CPI (ie slow and steady wins the race).
roadrunner
SLV = DT?
Its not whether the politicians have the stones, but rather the American people. Of politicians I have no faith, in the people I have much.
Knowledge is the enemy of fear
This is mostly correct, as those price spikes are often short lived and prices revert back toward levels. For example, corn traded between roughly $2.50-$3.50 for decades. It was only in 2007 when corn broke above $3.00 for a sustainable period. Why? Because of this http://en.wikipedia.org/wiki/Energy_Independence_and_Security_Act_of_2007
And once one food based commodity goes up, investors bid up prices of other crops, if for no other reason than they can. But more precisely, if corn is projected to be high, farmers will plant more corn and less wheat, soybeans, ect, which could cause a shortage of those crops and hence higher prices.
Do things cost more? Sure they do. Are people making more money? Yes they are. A problem only arises when prices rise faster than incomes. And for the past 30 years, food commodities have greatly underperformed salaries. Food costs are actually less a burden to J6P today, than they were 20 years ago. Now I know some will argue that restraurants costs more, but that is all due to labor related expenses. Others will say a box of cereal is smaller, perhaps, but the costs of the raw materials have not increased. The extra costs have gone to corporate profits, wages and benefits, legal issues, advertising, ect. So dont blame the FED for increased food costs. Instead, blame Congress for passing a stupid law, Kelloggs for taking advantage, speculators for seizing the day, unions for excessive wages and benefits, and ridiculous farm subsidies. All of those reasons can be controlled. Weather cannot.
Knowledge is the enemy of fear
<< <i>GLD = H&S?
SLV = DT?
Its not whether the politicians have the stones, but rather the American people. Of politicians I have no faith, in the people I have much. >>
That's because you're a softee and a homer. Much too sensitive
MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
<< <i>
<< <i>GLD = H&S?
SLV = DT?
Its not whether the politicians have the stones, but rather the American people. Of politicians I have no faith, in the people I have much. >>
That's because you're a softee and a homer. Much too sensitive
MJ >>
I'ld have this ship righted in about 6 months. Be a lot of unhappy people, but they'ed get over it.
Knowledge is the enemy of fear
<< <i>Its not whether the politicians have the stones, but rather the American people. Of politicians I have no faith, in the people I have much. >>
Not sure how you figure. Like it or not, the politicians are in control and it will be another 2 years before we can do anything about it. The most recent election results won't translate into any tough measures being enacted or real solutions being implemented. The people can riot, but I just don't see any riots in support of higher interest rates or austerity measures becoming reality here or anywhere. From the polls I saw, 70%+ of the American people think and support radiating grandma and infants because they think it will keep us safe from terrorists.
Support for gold is at 1358.4, 1364.5, and resistance at 1374.6, 1380.7.
The conspiracy theorist might suggest that Washington is gearing up for war with N. Korea, perhaps in a play to boost the economy:
McCain: Time to discuss ‘regime change’ in North Korea
VIX chart showing an expanding wedge over the past 6 weeks and now running into the 200 dma.
Edit for end of day: there were junior miners breaking out all over the place today...kind of coincided with the 4% silver move. BVN, the one gold and silver miner that had been showing great resilience throughout this corrective period and had barely dropped off from its November peak fell back about 6% today while the other miners rallied. The cause: Peru mentioning that it was considering raising PM royalties due to the govt. All of BVN's major producing mines are in Peru. Ouch!
roadrunner
<< <i>The dollar is smoking higher, but gold is also. Someone must be doing some heavy gold buying... >>
My theory is that European and Asian buying is propelling gold...
Just wait and see what happens when the dollar falls...
December thread started.