Bill Gross
ranshdow
Posts: 1,441 ✭✭✭✭
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ranshdow
Posts: 1,441 ✭✭✭✭
ranshdow
Posts: 1,441 ✭✭✭✭
Comments
The U.S. government and the FED is a very sick and twisted symbiotic relationship that rely on eachother to suck the wealth from the nation's people. But the FED needs the U.S. government much more than the other way around!
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>Bill Gross is generally the smartest guy in any room. He is the undisputed bond king. When he says that there is a problem in bond land one should gather up their elephant and leave the room immediately. Don't look back. I'm buying a lot of what Bill's been selling.....................MJ >>
The only problem with Gross' scenario is that interest rates are less than inflation and so are less than zero already, imho.
What does the bond king do when no one is buying bonds? Do they all pack into TBT?
Or the waitress can be locked into a closet so her reaction cannot be seen or evaluated.....the same thing was done with otc derivatives. Or just blindfold her and tell her she
got a massive $50 tip (ie but it was really only a $1 bill). Then invest her "$50" in a TBond.
roadrunner
<< <i>Bill Gross is generally the smartest guy in any room. He is the undisputed bond king. When he says that there is a problem in bond land one should gather up their elephant and leave the room immediately. Don't look back. I'm buying a lot of what Bill's been selling.....................MJ >>
Can you explain to me why the U.S. government would continue to allow the FED the monopoly of printing FRN's in the event that the FED turns its back on the government? I'd LOVE to hear your thoughts on this!
Break out the vaseline. It's not over.
I knew it would happen.
There is precedent for monetary tightening at the Fed. His name is Volcker.
Just trying to point out that your certainties about the future of Fed action are anything but. Just sayin'.
I'm buying a lot of what Bill's been selling.....................MJ
It behooves us all as macroeconomic amateurs and sometime speculators to think through the consequences of a dearer long bond.
on topic...i think
<< <i>Is this guy serious? Stating that the FED may someday not buy U.S. issued treasuries?
There is precedent for monetary tightening at the Fed. His name is Volcker.
Just trying to point out that your certainties about the future of Fed action are anything but. Just sayin'.
I'm buying a lot of what Bill's been selling.....................MJ
It behooves us all as macroeconomic amateurs and sometime speculators to think through the consequences of a dearer long bond. >>
Volcker tightened the money by raising rates to 20%. Thats impossible today. Our current interest payments on our $14 trillion debt amounts to $400 billion. Thats about 2.9%. The total annual revenue for the U.S. government is currently $2.7 trillion or so. Therefore, 15% of the governments TOTAL yearly revenue goes straight to interest payments alone. Now lets see what a 10% interest rate does. $1.4 trillion to interest payments out of $2.7 trillion in receipts, creating a stagering 51% of all revenue just to interest! Care to see what a 20% rate does? $2.8 trillion towards INTEREST payments out of a total collected revenue of just $2.7 trillion.
So raising interest rates is a big no-no due to the massive debt we hold. Thats most likely why the rates have been held so low now for so long. Its less that the government wants to spur the economy, and more that it doesnt want to increase the debt interest payments.
However, its a double edged sword. If inflation zooms past the rate of return on treasuries, nobody will want to buy them. If the FED tries to quell inflation by raising the rates, the treasuries will have to pay more interest to be even slightly palatable to investors, thus bankrupting the government with interest payments that become the overwhelming majority of the annual budget.
There is no winning play here. Its hard to believe even some of the smartest talking heads....and biggest "elephants" in the business cant see what a fireman with a simple H.S. diploma can see. Makes me wonder if those "smart guys" are actually more manipulative than smart.
To usher in a new era of rising interest rates, the top 5 US banks have to safely unwind/cancel/or eat $200 TRILL in notional interest rate swaps. There's got to be trillions in losses waiting to be taken which is a much larger scale than seen with the AIG debacle. What are the chances of that happening?
roadrunner
It woudn't happen overnight, and higher rates apply only to newly issued debt. Par value on the $14T of outstanding federal debt (avg maturity ~6yrs) would drop like a stone, with substantial capital losses (realized or not) to whomever is holding the bag- China, Japan, Saudi Arabia et al. Substantial wealth transfer would occur from these bagholders towards whomever happens to be buying the new debt at 20% ("suckers" like me?). The important question is whether there are enough buyers at 20% to refinance the old debt as it comes due, and whatever new debt the good people in Washington see fit to saddle us with.
If inflation zooms past the rate of return on treasuries, nobody will want to buy them.
You could argue that's already the case... yet the sovereigns with current account surpluses are "still good for" $800Bn in net new purchases/yr (according to Gross). I'm not so convinced the mkt for new sovereign US debt at those rates would be anemic.
To usher in a new era of rising interest rates, the top 5 US banks have to safely unwind/cancel/or eat $200 TRILL in notional interest rate swaps.
The 30yr bull run in long bonds may be ending. Have they started unwinding? Can you provide any references in support, either way?
I ask not to be a smartass, but rather because I dont know how it works. Does a 6 year bond mean I have to simply wait 6 years to collect full interest, yet I can redeem for face value at any time? Or does it mean I cannot even redeem it until 6 years has passed?
Also, I have seen that the vast majority of treasuries issued are much shorter term than 6 years. Am I wrong?
Considering that the otc derivatives increased from $225 TRILL to $235 TRILL on the last OOC 6 month report, it doesn't appear that they are unwinding.
85% of all otc derivatives have consistently been interest rate swaps. So rather than unwinding, it would seem they are still winding the spring ever tighter.
Unforunately it's months before the next report comes out in June/July.
roadrunner
<< <i>Explain this to me then. Lets say im a large Japanese bank holding billions worth of current T-bonds at the current paltry rate. The FED then decides to up the ante and slow down inflation by raising the interest rate to double digits. What prevents me from redeeming those treasuries right now, and reinvesting the money in the newer high yield bonds?
I ask not to be a smartass, but rather because I dont know how it works. Does a 6 year bond mean I have to simply wait 6 years to collect full interest, yet I can redeem for face value at any time? Or does it mean I cannot even redeem it until 6 years has passed?
Also, I have seen that the vast majority of treasuries issued are much shorter term than 6 years. Am I wrong? >>
T-bonds aren't "redeemable," they must be held for the duration. This is a big difference between a bond and a CD and savings bonds. A CD can be broken by choice, with a typical six month interest penalty paid. Savings bonds can also be redeemed before the full term. This is not a choice for treasury bonds. A firm can choose to sell at the current market rate, and depending on the yield to maturity at issue, and the current prevailing market rate, the bond might sell at a discount or a premium to issue price.
For a hypothetical example (don't hold me to the numbers, I'm doing the math in my head): back in 1990 a 30-year bond was purchased for $1000, yielding 7% to maturity in 2020. If sold today, it would trade at a significant premium. It is now a nine-year instrument that will redeem for $1000 in 2020, but yields $70 in interest per year. The ballpark trading value might be $1180. There are fancy programs to calculate it down to the penny, I'm just doing a rough guess on the math in my head. Now take the opposite example, a 30 year bond was bought for $1000 at the height of the fear in 2008 at 3.8 yield to maturity in 2038. Today that low yielder would have 27 years left and trade at a discount because the current 30 year rate is more like 4.5%. No rational person will buy that low yielder unless it is offered at a discounted price, say $930 or so. Basically, if rates move against you, and you want to shorten the maturity, or restart at the current market rate, you take a capital loss (a 7% loss of capital in the example). Your choice, but it is not a "free play."
<< <i>Explain this to me then. Lets say im a large Japanese bank holding billions worth of current T-bonds at the current paltry rate. The FED then decides to up the ante and slow down inflation by raising the interest rate to double digits. What prevents me from redeeming those treasuries right now, and reinvesting the money in the newer high yield bonds?
I ask not to be a smartass, but rather because I dont know how it works. Does a 6 year bond mean I have to simply wait 6 years to collect full interest, yet I can redeem for face value at any time? Or does it mean I cannot even redeem it until 6 years has passed?
Also, I have seen that the vast majority of treasuries issued are much shorter term than 6 years. Am I wrong? >>
Normally, the holder cannot redeem for face value at any time. They must hold the bond until it mature to get the face value from the government. If the holder want to sell before maturity, they can sell it in the secondary market, but he may or may not get the face value.
I don't have the actual figure, but I believe you are correct that the government mainly borrows short term money.
To be clear, each bond was issued at a different rate because they were issued at different points in time and with different maturities. The Japanese might be holding some bonds that carry a 5% rate, some with a 3% rate, and some with a 5.75% rate.
If rates in general go up, the value of the existing bonds goes down. Got it? Therefore, if rates go up and you are holding a sh*tload of bonds, you are screwed because every single one of them is losing value, regardless of the maturity and regardless of the rate.
Longterm bonds usually have better rates, and their current market values are also much more sensitive to changes in rates.
The FED then decides to up the ante and slow down inflation by raising the interest rate to double digits. What prevents me from redeeming those treasuries right now, and reinvesting the money in the newer high yield bonds?
As Red Tiger mentioned, you can't redeem them, but you can sell them. Since they have been discounted because of rising rates, your net yield is less now when you sell to the secondary market. Nothing prevents you from reinvesting the money in newer high yield bonds, but you simply have less capital with which to do so.
I have seen that the vast majority of treasuries issued are much shorter term than 6 years. Am I wrong?
I think your observation is correct. And that is the main problem we are having with the government's finances. They can no longer sell the longer term bonds because any fool who wanted to buy a longer term Treasury Bond would demand a much higher rate. China, and others are no longer willing to accept our long term debt at the low interest rates, and they have stopped buying it. The government doesn't want to face reality and admit that inflation is burning, so they are pulling all kinds of stunts in order to keep up appearances. In order to keep long term rates from rising, the Fed is buying the longterm Treasuries! This of course is completely nuts!
The markets are rarely fooled, and in this case they aren't. The Fed doesn't "make" anything! Where do THEY get the money? Inflate the currency, perhaps? This is just a new wrinkle designed to fool would-be bond buyers into thinking that there is a market for longterm Treasury Bonds at the lower yields, when there really is not. Sidebar - nobody is fooled.
Here's the problem - the US government has to keep re-financing all the debt in order to generate cash to pay their employees and contractors, in addition to funding all the stuff they promise everyone in the world. No-fly zone in Libya? No problem - create more debt, get the cash, spend it on stuff. Free health care for 30,000,000 more non-taxpayers? No problem - create more debt, get the cash, spend it on votes. These financings have edged towards shorter and shorter maturities because people don't think that longer term bonds at higher yields are attractive. And with good reason. Inflation kills bondholders.
As the debt increases and as US Treasuries trend towards shorter terms at lower yields, it gets harder to keep refinancing. At the same time, the market (PIMCO, Bill Gross for example) wants higher yields for longterm (and intermediate) debt securities because of the obvious inflation risk. It is an irresistable force vs. an immovable object. Either the government wins, or the market wins.
Finance is a funny thing. If you spend, you have to pay. You can get the money through taxation or through *money creation, i.e., inflation*. The debt won't go away and it has to be addressed or default will occur. If the US government defaults on its debt, which it won't - all finance stops. The alternative is to *stop spending* and to start paying it off gradually. No other math works.
Got precious metals?
I knew it would happen.
<< <i>Thanks to both of you for clearing that up. Now, it begs the next question......who on earth is stupid enough to be buying long term treasuries then? Seems like a SURE way to lose money to me when factoring in both inflation, and the possibility that the USD may not be the reserve currency for much longer. >>
Long term investing is a funny game. It isn't about what is happening now, or even what happens in the future, but what happens in the future vs. the consensus expectations about the future. I mentioned this fact in another thread, one of the very best times to load up on gold for the long term was the last time the U. S. government had a budget surplus in 2000. Back then, many states were also reporting surpluses, the economy was close to the theoretical "full employment." The stock market was going up, up and away, so much so that many baby boomer equity investors were counting their chickens and thinking about early retirement. Back then there were articles about gold being dead money, and being one of the worst possible places to put money. The economic picture was full of sunshine, puppies and rainbows--and yet that was one of the very best times to load up on long term gold. Think about that for a moment. Then think about what your expectations are for the future. Then think about what it might take to beat your expectations for bonds, the dollar, and inflation. That's the game within the game. It isn't an easy game, and why so many average folks and even very smart folks fall on their faces when trying to time the markets.
<< <i>
<< <i>Thanks to both of you for clearing that up. Now, it begs the next question......who on earth is stupid enough to be buying long term treasuries then? Seems like a SURE way to lose money to me when factoring in both inflation, and the possibility that the USD may not be the reserve currency for much longer. >>
Long term investing is a funny game. It isn't about what is happening now, or even what happens in the future, but what happens in the future vs. the consensus expectations about the future. I mentioned this fact in another thread, one of the very best times to load up on gold for the long term was the last time the U. S. government had a budget surplus in 2000. Back then, many states were also reporting surpluses, the economy was close to the theoretical "full employment." The stock market was going up, up and away, so much so that many baby boomer equity investors were counting their chickens and thinking about early retirement. Back then there were articles about gold being dead money, and being one of the worst possible places to put money. The economic picture was full of sunshine, puppies and rainbows--and yet that was one of the very best times to load up on long term gold. Think about that for a moment. Then think about what your expectations are for the future. Then think about what it might take to beat your expectations for bonds, the dollar, and inflation. That's the game within the game. It isn't an easy game, and why so many average folks and even very smart folks fall on their faces when trying to time the markets. >>
Im of the opinion that these current times are sunshine and puppy dogs compared to whats ahead shortly. Therefore, gold/silver should still be solid buys even at these levels?
Gross is actually very negative on Treasuries. Here's a link to an article from last month. I don't believe he is posturing and this has been his POV for awhile now. There is a rift in The Force. FYI- I believe there are some outstanding values in the muni market for those seeking yield. I've been spending quite a bit of time researching this topic. Muni's are pretty hated right now as the press has done a nice hatchet job on them.
FWIW- There are very few folks I will stop in my tracks to hear what the are saying/selling: Rogers, Berkowitz and Gross are on a short list.
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......
Indeed.
Question your convictions and your certainties. Human beings are hardwired to extrapolate current events into the future. It's a bias one needs to be aware of and in the financial arena, can be deadly.
***
I've been told a good trader doesn't make predictions. They see what is, assess the risk, and act accordingly.
A number of you are making money in PMs. Good for you, but it is afterall a bull market. Who knows how long it will last, and who cares what will eventually end it. Personally I have no idea what a spike in LT rates would do to metals, but I can imagine it breaking either way.
Good luck, and watch your stops.
Mine is nex to Got Vodka? Hahaha.
Comrade Renski
<< <i>
<< <i>
<< <i>Thanks to both of you for clearing that up. Now, it begs the next question......who on earth is stupid enough to be buying long term treasuries then? Seems like a SURE way to lose money to me when factoring in both inflation, and the possibility that the USD may not be the reserve currency for much longer. >>
Long term investing is a funny game. It isn't about what is happening now, or even what happens in the future, but what happens in the future vs. the consensus expectations about the future. I mentioned this fact in another thread, one of the very best times to load up on gold for the long term was the last time the U. S. government had a budget surplus in 2000. Back then, many states were also reporting surpluses, the economy was close to the theoretical "full employment." The stock market was going up, up and away, so much so that many baby boomer equity investors were counting their chickens and thinking about early retirement. Back then there were articles about gold being dead money, and being one of the worst possible places to put money. The economic picture was full of sunshine, puppies and rainbows--and yet that was one of the very best times to load up on long term gold. Think about that for a moment. Then think about what your expectations are for the future. Then think about what it might take to beat your expectations for bonds, the dollar, and inflation. That's the game within the game. It isn't an easy game, and why so many average folks and even very smart folks fall on their faces when trying to time the markets. >>
Im of the opinion that these current times are sunshine and puppy dogs compared to whats ahead shortly. Therefore, gold/silver should still be solid buys even at these levels? >>
Wow, wow, wow. Three wows. Let me get this straight, this is the worst economic crisis since 1930 and you are saying that today will look full of sunshine, that today is a situation we will all reflect fondly upon? If that is the case, I have a couple of suggestions, get out more, maybe even a long vacation away from all computers and news. There is a chance that you are correct. If so, this may be the last chance for fun in a civilized world for a long time. As I understand it, you are still relatively young, best to have some fun now before the chance is gone, and 25% of the people you know are dead or starving or perhaps wishing they were dead.
I have a difficult time with the level of pessimism on this forum. It would be one thing if a person had lost their job, their wife, their house, their cars, and had to move to a cheap trailer park or into someone's basement, and beg off friends and relatives for food money. I may be off base, but virtually no one reading this is, is in that kind of mess. In spite of all the blessings the average reader here enjoys, so many forumites seem to focus on a solidly black sky that is about to fall on them. There is a chance the pessimists are going to be correct, but dude, that kind of thinking isn't healthy. After a certain point of reasonable preparation, a bigger pile of gold isn't going to bring anyone more joy if the financial world comes to an end. Enjoy life, get some sunshine, or whiskey, or whatever your healthy pleasures are. If you are right about the future, you are already prepared. If you are wrong and better days are ahead, all that needless worry will have taken a terrible toll on you, your family, and your friends.
I think maybe you're reading too much into that statement. I would also say that what's ahead in the next 2-4 yrs as the long term cycles all bottom is going to be worse than what we're already going through. How does the end of the current fiat regime end better? There's no way it can continue too much longer in its current form. I think to 80-90% of the nation things are still pretty much the same way they've been, except for some inconvenient higher prices for food, energy, taxes, and health care. The majority still think this is just a storm cloud or two passing overhead. Before long the sun will be beaming through once again just like it has every time during the past 30 yrs.
roadrunner
How about since 1946???
I don't know exactly what will happen, but we ain't going back to the way things were prior to the meltdown.
Wow, wow, wow. Three wows. Let me get this straight, this is the worst economic crisis since 1930 and you are saying that today will look full of sunshine, that today is a situation we will all reflect fondly upon? If that is the case, I have a couple of suggestions, get out more, maybe even a long vacation away from all computers and news. There is a chance that you are correct. If so, this may be the last chance for fun in a civilized world for a long time. As I understand it, you are still relatively young, best to have some fun now before the chance is gone, and 25% of the people you know are dead or starving or perhaps wishing they were dead.
I have a difficult time with the level of pessimism on this forum. It would be one thing if a person had lost their job, their wife, their house, their cars, and had to move to a cheap trailer park or into someone's basement, and beg off friends and relatives for food money. I may be off base, but virtually no one reading this is, is in that kind of mess. In spite of all the blessings the average reader here enjoys, so many forumites seem to focus on a solidly black sky that is about to fall on them. There is a chance the pessimists are going to be correct, but dude, that kind of thinking isn't healthy. After a certain point of reasonable preparation, a bigger pile of gold isn't going to bring anyone more joy if the financial world comes to an end. Enjoy life, get some sunshine, or whiskey, or whatever your healthy pleasures are. If you are right about the future, you are already prepared. If you are wrong and better days are ahead, all that needless worry will have taken a terrible toll on you, your family, and your friends. >>
Ok, a few questions for you then.
For how much longer will a nation whose "poorest" people....those who dont work at all....still be able to enjoy the benefits of shelter, food, free cell phones, obesity, and 50 inch flat screen TVs with X-Box?
How much longer will the world accept that this nation's largest export is inflation, and be ok with that?
How much more credit will be extended to a nation whose debt levels have become a "hockey stick" on a graph?
How does this nation make good payments on SS to all the boomers about to retire when the entire SS trust fund is currently a 3 ring binder full of "special treasuries"? Hint: Its either borrow, print, or default.....which do you see as the "sunshine" option there?
These are just a few of my concerns...and why I think the CURRENT times are going to look like a walk in the park as compared to 5-10 years out. Also, there wont be an "end to the financial world", but there will be major changes.....a re-birth if you will. The dollar will eventually be inflated right out of world reserve status, if it doesnt simply collapse altogether. But something WILL take its place.
Im not talking about a meteor hitting the earth, or anything "physically" crippling like that. Thats true armaggedon. Im just preparing for the possibility....the very real possibility, that soon the rest of the world is going to wake up and realize that the dollar has simply become a barberous relic, and that our fiscal policies and over indulgence over the past few decades have finally caught up with us.
For the VAST majority of people in this country, Americans simply live a lifestyle that is "undeserved". For the amount of goods we manufacture and export...in relation to the amount we import, there is no way we can maintain the lifestyle we do now. The bloated USD is the stick that has propped us up, and once that breaks, there WILL be drastic changes to the standard of living in this country.
<< <i>I mentioned this fact in another thread, one of the very best times to load up on gold for the long term was the last time the U. S. government had a budget surplus in 2000. Back then, many states were also reporting surpluses, the economy was close to the theoretical "full employment." The stock market was going up, up and away, so much so that many baby boomer equity investors were counting their chickens and thinking about early retirement. Back then there were articles about gold being dead money, and being one of the worst possible places to put money. The economic picture was full of sunshine, puppies and rainbows--and yet that was one of the very best times to load up on long term gold. Think about that for a moment. Then think about what your expectations are for the future. Then think about what it might take to beat your expectations for bonds, the dollar, and inflation. That's the game within the game. It isn't an easy game, and why so many average folks and even very smart folks fall on their faces when trying to time the markets. >>
Excellent comments, very well said. To make the real money, usually you need to buy assets when everyone hates them and sell when everyone loves them. Got real estate?
<< <i>
<< <i>I mentioned this fact in another thread, one of the very best times to load up on gold for the long term was the last time the U. S. government had a budget surplus in 2000. Back then, many states were also reporting surpluses, the economy was close to the theoretical "full employment." The stock market was going up, up and away, so much so that many baby boomer equity investors were counting their chickens and thinking about early retirement. Back then there were articles about gold being dead money, and being one of the worst possible places to put money. The economic picture was full of sunshine, puppies and rainbows--and yet that was one of the very best times to load up on long term gold. Think about that for a moment. Then think about what your expectations are for the future. Then think about what it might take to beat your expectations for bonds, the dollar, and inflation. That's the game within the game. It isn't an easy game, and why so many average folks and even very smart folks fall on their faces when trying to time the markets. >>
Excellent comments, very well said. To make the real money, usually you need to buy assets when everyone hates them and sell when everyone loves them. Got real estate?
I like RE but I'm waiting for more D&G. Maybe early next year. First cleanup your own house with a low rate if you have not done so. Start looking in your favorite retirement area. That's how I bought my first beach house back in the mid 90's. Then my BH went parabolic and I had to sell 'cause I would never see that kind of return again in my lifetime.
Secondrepublic, yes, buying when no body wants it is tricky. You could be siting on something for a long, long time.
BBC article - Gold prices at 20-year low
CNN article - Gold loses its luster
The lesson from these articles is that perception is king. For my money, right now you're better off finding an asset which is comparable to gold in 1999/2000 -- an asset which widely disliked but which has been loved before and will be loved again.
<< <i>Consider these articles from just 12 years ago about the price of gold (then under $300/oz.). Reading them, it seems you'd have been crazy to put your money in gold.
BBC article - Gold prices at 20-year low
CNN article - Gold loses its luster
The lesson from these articles is that perception is king. For my money, right now you're better off finding an asset which is comparable to gold in 1999/2000 -- an asset which widely disliked but which has been loved before and will be loved again. >>
In the BBC article it mentions gold at $262 in May 1979. Who would've thought gold would spike to $850 in less than year?!
Bill Gross has put his money where his mouth is. He sees Treasuries tanking which means he sees NO further QE. I don't agree with him, Washington is forever comitted to QE. Its QE or default.
Bill Gross Dumps All Treasuries
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i> Excellent comments, very well said. To make the real money, usually you need to buy assets when everyone hates them and sell when everyone loves them. Got real estate?
So how did buying PM's in 1982-1993 work out for you? They were still good deals for years after that as well.
RE might be a good buy in some parts of the country. You also have to be willing to wait, maybe 5-10 yrs to start seeing a decent return. We look back 8 yrs and say how easy it
was to buy PM's. Or look back to 1983 and say how easy it was to buy stocks. In fact very few did in either case. Stocks were cheap about 5 times from 1966-1982. No one got rich
buying them until decades later. Much of my investing psyche was built (or should I say devastated) from owning stocks from 1966-1982. When things crashed in 1987 I was convinced that stocks stunk forever and I was not going to own them ever again...esp after 20 yrs of lousy returns. I missed the majority of the 1988-2000 run-up because of it. I'm still fighting that psyche today. It's not easy to reprogram your brain from pain. Where you enter a cycle makes a huge difference. I was 20 yrs too early and it cost me. Or you could say that the hard metals '70's also contributed to my tangible asset mindset.
In the BBC article it mentions gold at $262 in May 1979. Who would've thought gold would spike to $850 in less than year?!
Jim Sinclair and others like him did. And if you look at the gold, silver, and oil charts from 1965-1979, you probably could have figured out what was coming in the 2nd half of 1979.
Just using some basic TA and charting tools the trend by May '79 was already well set and into parabolic mode. Note that the 2nd impulse wave occured in the mid'70s. The 3rd and final was well underway by January 1979. Too bad I didn't know squat about charting back then. www.chartsrus.com has some 70's charts you can look at.
roadrunner
I agree. It was absolutely see-able.
I knew it would happen.
<< <i>Jim Sinclair and others like him did. And if you look at the gold, silver, and oil charts from 1965-1979, you probably could have figured out what was coming in the 2nd half of 1979. Just using some basic TA and charting tools the trend by May '79 was already well set and into parabolic mode. Note that the 2nd impulse wave occured in the mid'70s. The 3rd and final was well underway by January 1979. Too bad I didn't know squat about charting back then. www.chartsrus.com has some 70's charts you can look at.
I agree. It was absolutely see-able. >>
I don't agree at all. There were a few voices in the wilderness starting back around 2000 saying to buy gold (Jim Sinclair among them), but there were others (not Sinclair) saying the same thing in 1995, 1990, 1985, and so on back in time. So what's the entry point? Who do you listen to? Those are the hard questions for everyone here.
<< <i>Who do you listen to? Those are the hard questions for everyone here. >>
Not quite as hard for those that read all they can get there hands on and learn how to make there own decisions based on facts and not recommendation. Information is vital to making sound investment decisions.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
One doesn't have to agree or disagree based on a snap judgement. Just look at the gold and silver charts from 1965-1979 which were screaming bull market, get in at the pull back points.
The PM charts from the 1980-2001 period don't look anything like that earlier period. If one doesn't consult charts or fundamentals then I could see why people could have fallen for the advice of analysts to jump back in to PM's from 1985-1995. Then again you'd have to wonder whybother if the SM was returning great returns from 1988-1999. I listened to Sinclair in August 2002 when he discussed the carnage that otc derivatives would reap on the financial system. It made perfect sense esp. with gold out of favor for 20 yrs and considered a dead relic. And it didn't hurt that the SM was bottoming from 2001-2003. PM's certainly looked like their time was due. Certainly computers have made following these trends far easier and more accessible than it was in previous decades. I never looked at a chart until sometime in late 2002. But I finally got a handle on them.
roadrunner
Respectfully, I form my own opinions about investing, politics, food, and everything else. Like derryb suggests, it pays to read and to dig out good information. It does absolutely no good to take anyone's opinions and treat them as infallible.
Over the years, I've found several good financial writers, including Harry Browne, Doug Casey, Richard Russell, Jim Sinclair and Reggie Middleton. In the 2nd tier, I would include Howard Ruff, Jim Dines, Louis Rukeyser, Howard Katz, Peter Schiff & Nassim Taleb.
Jim Willie is in a class of his own, and so is Mogambo Guru - but I sure wouldn't discount either of them, and for a bond guy, Bill Gross is on-target. Rick Santelli is every bit as astute as anyone you will find on Wall Street.
I'd even go as far as including our very own roadrunner in a toe-to-toe matchup with most of the guys listed above.
Good insight is where you find it. You still have to do your own thinking.
I knew it would happen.
The sell off of bonds and equities will create a lot of cash on the sidelines. Will PM speculators join them or will all that cash join the speculators? Overnight PM markets may give us a hint. This is a make it or break it moment for the short term PM market, and in my view could go either way until we know more.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Bill Gross has been expressing his discontent for months. Was this a gradual thing, or did he just dump? I'm just watching, but I also wonder if you're not right about this.
2ndR, your remark only reminded me of a conversation, but I'd never put you anywhere near the category of the person who made that particular comment. The fact that we might disagree on whether the 1979 silver price rise was see-able isn't related to my other conversation in any way. You can back up an opinion with reason and fact; on the other hand, she is an idiot. I'm somewhat embarrassed to think that it once took me about 3 weeks to find that out.
I was either incredibly lucky in 1978-1979-1980, or it was see-able. And since 1998, I've been incredibly lucky, or it's been see-able. counterpoint.
I knew it would happen.
I read both of Doug Casey's books (Crisis Investing & Strategic Investing) back in the day and greatly enjoy his writings.
C.V. Myers (Money & Energy) wrote from Spokane, WA back in the late 70's and I recall his use of "bending a paper clip back and forth, ultimately breaking in two" in reference to the fiat money system. It appears we are truly drawing closer to that day re the U.S. dollar.
Well, maybe in a toe-to-toe matchup on "Dancing with the Stars," but I think MJ could kick my butt there as well.
As I read the Bill Gross article he finished the move back in January. And his TBond holdings have declined since peaking last June. Wouldn't the market
players have already been aware of his activity for quite some time now? Would this really get sheeple to change their current positions as they're probably
some of the biggest bond holders via 401K's, etc.
Guess this means that Bill Gross is no longer on Bernank's or Geithner's Christmas card mailing list.
roadrunner
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
It seemingly could go either way. If the dollar breaks downward is losing 10% or more on those "cash" funds a worthy option? Then again, the dollar seems within a couple months
of hitting a cyclical 3+ yr bottom. From there it could logically bounce. I don't like guessing games with fiat paper.
roadrunner