Gold at $1800 and Silver at $40... Is this the New Normal?
Baley
Posts: 22,660 ✭✭✭✭✭
The prices of gold and silver seem to have stabilized? How would you feel if they stayed at these levels indefinitely?
Say, for example, gold traded between $1750 and $1850, and Silver between $38 and $42, for the next 5 years?
would this board become incredibly boring, or stay the same exciting, stimulating place it has been the past couple years?
Say, for example, gold traded between $1750 and $1850, and Silver between $38 and $42, for the next 5 years?
would this board become incredibly boring, or stay the same exciting, stimulating place it has been the past couple years?
Liberty: Parent of Science & Industry
0
Comments
"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
do they? or can conditions exist which allow "dynamic equilibrium" in PM prices? What happens if the dollar index also stabilizes in the 76-80 range?
Liberty: Parent of Science & Industry
<< <i>The prices of gold and silver seem to have stabilized? How would you feel if they stayed at these levels indefinitely?
Say, for example, gold traded between $1750 and $1850, and Silver between $38 and $42, for the next 5 years?
would this board become incredibly boring, or stay the same exciting, stimulating place it has been the past couple years? >>
Nothing remains stable...it either goes up or down, including woman's skirt lines.
I knew it would happen.
<< <i>What happens if the dollar index also stabilizes in the 76-80 range? >>
Then Washington has become Baleyville.
"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>The prices of gold and silver seem to have stabilized? How would you feel if they stayed at these levels indefinitely?
Say, for example, gold traded between $1750 and $1850, and Silver between $38 and $42, for the next 5 years?
would this board become incredibly boring, or stay the same exciting, stimulating place it has been the past couple years? >>
I think this is highly possible. Highly. I think the market realizes this as well and is why miners are beginning to outperform.
I believe the level of anxiety on this board would increase. Bewilderment and confusion would reign. Many threads would start out. "I dont understand..."
Knowledge is the enemy of fear
<< <i>
<< <i>The prices of gold and silver seem to have stabilized? How would you feel if they stayed at these levels indefinitely?
Say, for example, gold traded between $1750 and $1850, and Silver between $38 and $42, for the next 5 years?
would this board become incredibly boring, or stay the same exciting, stimulating place it has been the past couple years? >>
I think this is highly possible. Highly. I think the market realizes this as well and is why miners are beginning to outperform.
I believe the level of anxiety on this board would increase. Bewilderment and confusion would reign. Many threads would start out. "I dont understand..." >>
Yeah, but it would be exciting trading the channel (buy at 38 double sell at 42, repeat over and over. 5 years of that would give a great return and
in the mean time adding still adding to the stack.
your question about normalcy is not normal. Even common sense is not very common.
EEeechk, I just typed that drivel?
bob
PS: I guess I should have replied with "what's normal"?
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I certainely hope not
I think (hope) we will see $3500 Gold & $85 silver
JMHO, GrandAm
Yes, I know there are those who will say that if we see the price levels I quote above that the country will be in a shambles,,,,,,,,,,,,,,
I have news for you,,,,,,,,,,,,,,, we are already so far gone it is a foregone conclusion anyway.
<< <i>
<< <i>What happens if the dollar index also stabilizes in the 76-80 range? >>
Then Washington has become Baleyville. >>
What if the dollar index stabilizes in the 90-100 range?
Knowledge is the enemy of fear
Liberty: Parent of Science & Industry
<< <i>I think (hope) we will see $3500 Gold & $85 silver >>
There is no doubt we will see the numbers in terms of USD. It's simply a matter of when, not if................
–John Adams, 1826
<< <i>then it becomes Cohodkville Deluxe! >>
I just hope it stops at 100.
Knowledge is the enemy of fear
and more important Government
Controls, where they can buy and sell, to whom and at what price.
Camelot
would this board become incredibly boring, or stay the same exciting, stimulating place it has been the past couple years?
No risk of that happening. Gold just broke $1,750 on the downside at $1,749.50, and silver just broke $38.00 on the downside, now at $37.79.
The markets have such a short term bias that none of this matters. Bernanke just pulled the same trick bunny out of his hat, except that it is a different colored bunny, and the markets can't seem to figure out that we've seen this trick before.
In addition, it appears that a crashing Euro is driving money into the dollar today.
Realizations about this newest slick form of QE will sink in sometime when stocks go south in an impressive way, and when the Chinese bond liquidation (and avoidance of new bond issues) continues. Nothing has changed.
cohodk, you are getting your deflation. Bernanke puts on a good game face, but he's going to inject money regardless of what he says publically and regardless of how it gets done. The volatility is a good indicator of what's happening. Nobody knows who is doing what, in what quantitity, in what manner, or on what timetable. Bennie and Timmy know, and so does Dudley and so do the investment management teams at JPM and GS.
When the public takes another hit in their retirement accounts holding stocks & bonds, what do you think will be the next monetary policy response? I have a wild hunch about what the political pressures will do. The stock market will be "rescued" again. Is there any doubt about that? And the PMs will have another leg up.
Scared money will keep running back & forth, which is exactly what JPM and GS want. The gov't is clueless.
I knew it would happen.
<< <i>Say, for example, gold traded between $1750 and $1850, and Silver between $38 and $42, for the next 5 years?
would this board become incredibly boring, or stay the same exciting, stimulating place it has been the past couple years?
No risk of that happening. Gold just broke $1,750 on the downside at $1,749.50, and silver just broke $38.00 on the downside, now at $37.79.
The markets have such a short term bias that none of this matters. Bernanke just pulled the same trick bunny out of his hat, except that it is a different colored bunny, and the markets can't seem to figure out that we've seen this trick before.
In addition, it appears that a crashing Euro is driving money into the dollar today.
Realizations about this newest slick form of QE will sink in sometime when stocks go south in an impressive way, and when the Chinese bond liquidation (and avoidance of new bond issues) continues. Nothing has changed.
cohodk, you are getting your deflation. Bernanke puts on a good game face, but he's going to inject money regardless of what he says publically and regardless of how it gets done. The volatility is a good indicator of what's happening. Nobody knows who is doing what, in what quantitity, in what manner, or on what timetable. Bennie and Timmy know, and so does Dudley and so do the investment management teams at JPM and GS.
When the public takes another hit in their retirement accounts holding stocks & bonds, what do you think will be the next monetary policy response? I have a wild hunch about what the political pressures will do. The stock market will be "rescued" again. Is there any doubt about that? And the PMs will have another leg up.
Scared money will keep running back & forth, which is exactly what JPM and GS want. The gov't is clueless. >>
Bernanke can inject all the money he wants, it wont matter. He has already pumped $2 trillion into the markets and we've gotten nowhere. The Chinese have been increasing their holdings of Treasuries. They will only sell when they have to pump up their own economy which when it crashes will make ours look like Baleyville. The G will continue to issue bonds and they will be eagerly purchased. Look at Japan as a case example.
When the public takes a hit to their equity accounts what will they do? What will be the monetary response? Well, perhaps they get rid of Bernanke. Isnt that want Ron Paul wants to do? So what happens when they shut down Bernanke and his helicopter? No more free money = GRAVITY!!!!!
Everyone has been so entrained to EXPECT ever increasing prices (heck, there was even a thread started about it recently on these boards), that they have NO CLUE that prices can actually go lower. This includes EVERYONE--money managers, politicians, union workers, ect. Like I said earlier, deflation will surprise everyone.
Knowledge is the enemy of fear
This is exactly why Bernanke won't be fired and also why he will pump out more money. The political pressure will force his hand. He might have to start wearing a beret and shave his beard in the end, so that fewer people will recognize him on the street.
Now, getting back to your deflation - the root of this problem is that the Fed is charged with the job of making the central bankers whole again, by slowly liquidating the backlog of derivatives and overbought housing stock. This is gonna take alot of time and "shared sacrifice" by Joe. Undoubtedly, the deflationary forces are to be reckoned with. Throw in the shrinking tax base and push towards socialistic freebies for the un and under employed, including the "don't wanna work, can't make me work" throngs down at Wall Street.
There are very few politicians who are willing to stand up to a withering assault on their principles when it comes down to doing what really needs to happen. I'm giving hyperinflation a much higher probability now. They just keep stacking wood on top of the future bonfire. No matter how it turns out, the 2012 election is going to be a doozy.
I knew it would happen.
the ranges were "for example"
I'm giving hyperinflation a much higher probability now.
I'll believe in severe inflation when a loaf of bread, a gallon of milk or gas, or a pound of hamburger or copper is $10 within a couple of years. At what time period and price would you define Hyperinflation?
Liberty: Parent of Science & Industry
If this does not happen, then I would expect hyperinflation, from Wikipedia:
The slope of the yield curve is one of the most powerful predictors of future economic growth, inflation, and recessions. One measure of the yield curve slope (i.e. the difference between 10-year Treasury bond rates and the federal funds rate) is included in the Index of Leading Economic Indicators.
An inverted yield curve is often a harbinger of recession. A positively sloped yield curve is often a harbinger of inflationary growth. Work by Dr. Arturo Estrella & Dr. Tobias Adrian has established the predictive power of an inverted yield curve to signal a recession. Their model show that when the difference between short-term interest rates (he uses 3-month T-bills) and long-term interest rates (10-year Treasury bonds) at the end of a federal reserve tightening cycle is negative or less than 93 basis points positive that a rise in unemployment usually occurs.
All of the recessions in the US since 1970 (up thru 2011) have been preceded by an inverted yield curve. Over the same time frame, every occurrence of an inverted yield curve has been followed by recession as declared by the NBER business cycle dating committee..............
................Dr. Estrella has postulated that the yield curve affects the business cycle via the balance sheet of banks. When the yield curve is inverted banks are often caught paying more on short-term deposits than they are making on long-term loans leading to a loss of profitability and reluctance to lend resulting in a credit crunch. When the yield curve is upward sloping banks can profitably take-in short term deposits and make long-term loans so they are eager to supply credit to borrowers.
Bernanke's big claim to fame is "the Depression-buster" via monetary policy. Right now, he's failing. If he hyperinflates, he's also failing. We will see which way he goes.
I knew it would happen.
The enormity of the debt problem is larger than any and all central banks. The way out of this is for people, banks, institutions, to lose money via debt write-down, forgiveness, whatever you want to call it.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
But, he's gonna do it anyway. His bosses are desperate.
There will be more volatility. It's not a trading market, and it's not a buy & hold market. Whatever you end up doing, you have to be right.
I knew it would happen.
<< <i>I'm saying that Bernanke knows how close to being inverted the yield curve is, and he knows what comes next unless he inflates. How is he going to inflate? The same way he pumped up the stock market with QE1 and QE2. You know that won't work, and so does he. So do I.
But, he's gonna do it anyway. His bosses are desperate. >>
So if he does it, and it doesnt work, then where is the inflation?
BTW----yield curves in emerging markets, Australia and Europe are MASSIVELY inverted right now.
Knowledge is the enemy of fear
Do you own a wheelbarrow?
BTW----yield curves in emerging markets, Australia and Europe are MASSIVELY inverted right now.
That's good to know, thanks.
As you may already realize, the question is - what next?
Bernanke's trial balloon from yesterday wasn't very well-received, was it? Will he capitulate, or will he double up? That's the question I see.
I knew it would happen.
All of the recessions in the US since 1970 (up thru 2011) have been preceded by an inverted yield curve. Over the same time frame, every occurrence of an inverted yield curve has been followed by recession as declared by the NBER business cycle dating committee..............
Isn't the whole point of "Operation Twist" to intentionally invert the yield curve? So in that case, it wouldn't necessarily be a leading indicator of a recession, would it? It seems like the problem now is a lack of demand, rather than tight credit.
Inflation and deflation are constant forces, just as life and death. Over the past 80 years we have been able to extend the life expectancy of humans by about 40%, yet we still die. Over the last 80 years we have been able to extend inflationary forces, but it also will die. The question is whether that death is drawn out or sudden.
Knowledge is the enemy of fear
I believe the objective of OT is to bring down mortgage rates. The real estate market is still the biggest problem. Lower mortgage rates could provide a floor to housing prices and stimulate buying. The yield curve isnt inverted and really cant at this point since short-term rates are already at zero. This does flatten the curve which hurts the banks which are already broke though.
Congress could have acheived basically the same by legislating a national mortgage program that would allow EVERYONE to refinance at 2 or 3% no matter the time remaining on your loan. This type of program must extend to ALL homeowners, not just those who are underwater.
Knowledge is the enemy of fear
The goal, as I heard it explained on CNBC is to drive buyers into "anything but Treasuries", i.e., stocks, corporate bonds and muni bonds. The effect will be to flatten the yield curve even more than it was already. Market forces may take it and invert it without any more help. Tight credit is indeed a problem right now, and I'm guessing that is the main concern. They have banks that are beyond being "ready to fail" and their books look like crap, if anyone could get a glance at them.
Nobody really knows what to do to "fix" it, because there isn't any "nice" answer.
Inflation and deflation are constant forces, just as life and death. Over the past 80 years we have been able to extend the life expectancy of humans by about 40%, yet we still die. Over the last 80 years we have been able to extend inflationary forces, but it also will die. The question is whether that death is drawn out or sudden.
All I'm sayin, is that "nobody" wants to think that we'd be so stupid as to invite hyperinflation. But as you say, Dave - there is a natural cycle in the course of life and death. I don't think that they can avoid the temptation to combat the bad paper on the balance sheets of the bad banks, the rising debt obligations of all governments, and the political pressures that have built up over time - with massive injections of liquidity, i.e. - money creation.
I just think it's coming, and those are most of the reasons that I think it.
I knew it would happen.
I dont disagree on the method, but I do the outcome. Replacing what is lost does not add. If people die at the same rate as births, then there is no inflation in the population. Likewise, if money is printed at the same rate as it is destroyed--thru defaults, ect--then there is no inflation. The problem I see is that globally there is more debt than ECBs count ever hope to replace. The end result will be a globe that is "worth" much less than today.
Knowledge is the enemy of fear
Tell me if I have it wrong, but when the money creation takes place, it directly adds to the debt burden - making it harder and harder to not only service the debt, but also making it harder to get an economy moving because the resources are being funnelled into debt repayment instead of economic activities. The debt burden then becomes greatly-dependent upon having low interest rates, which also directly inhibits bank lending and business activity.
Schiff is correct in that when savers are penalized, investment capital is not formed. When investment capital is not formed, jobs disappear. The idiots in our government can't even figure that one out.
The easier answer, the one that politicians always take - is to engineer a running default via inflating the currency. The harder it is to maintenance the debt, the faster they create new money in a futile attempt to stimulate the economy and an even more futile attempt to neutralize the huge overhang of bad debt residing in the banking system.
We are paying for corrupt bankers' excesses, and social engineering that doesn't work. None of these things are free. Only problem is, there isn't any money to accomplish these things, so it will be created out of thin air. It comes out on the spending side of the ledger as "already spent", but it plants itself firmly in bold black & white on the other side of the ledger as "debt outstanding".
I knew it would happen.
I tend to agree with this.
did I say gold 1800 silver 40? I know it was just last week, but maybe the New Normal (for now
Liberty: Parent of Science & Industry
stay "exciting" !!!
I knew it would happen.
Instead of throwing all this wasted QE to the banks, maybe the government should cut loose the banks and have a nationalized bank for this purpose. At least they will make the 2-3% on interest rather than a negative -2-3% rate by selling treasuries to give the money at 0 interest rate to the banks. The Feds already own a lot of the mortgages anyway through Fannie Mae...... I am a commoner. Does this make sense?
Box of 20
<< <i>The problem I see is that globally there is more debt [and debt destruction] than ECBs count ever hope to replace. The end result will be a globe that is "worth" much less than today.
I tend to agree with this.
did I say gold 1800 silver 40? I know it was just last week, but maybe the New Normal (for now
Don't blink ... how about $1500 & $25 ... we are getting there
loaves of bread, gallons of milk and gas, pounds of hamburger and copper still under $5
there's nothing HYPER about 3% inflation
Liberty: Parent of Science & Industry
Can't wait...
I knew it would happen.
<< <i>"Don't blink ... how about $1500 & $25 ... we are getting there"
Can't wait... >>
Me neither
The rate of M2 monetary inflation for 2011 will be pushing 8-10%....not 3%. The price of live cattle have been climbing for 2 yrs (+25%/yr) and is currently
at a 5+ year high. No doubt that has been felt at the meat counter of your local supermart. Based on current resources available to grow the cattle there will
be no relief in 2012 either. But the BLS is allowed to substitute Ken-L-Ration for beef to help keep the CPI-U down. Grains, softs, energy, and metals appear
to be close to the end of their intermediate corrections. Enjoy the current price inflation while you can because M2 and gold are giving signals of what's up ahead.
Our beef is so jacked up with hormones and antibiotics not to mention diseases that it's a wonder so many people still eat it. Funny that beef, copper, and milk are
mentioned in the same sentence as those leave behind byproducts in our bodies that contribute much to our rising rates of illness. We have to thank our butchers
and doctors for keeping beef relatively affordable. After all, if everyone were healthy who would the medical community sell prescription drugs to? And who would
sign up for the smorgasbord of "no cost" surgeries available to Americans?
roadrunner
^^^^^^^^^^^^
Depends on your timeframe. Buy good names, go to sleep for 20y, you'll be fine.
IF your timeframe is shorter than that, well good luck. Your generation had it's day; if you didn't make your hay while the sun was shining, well too bad for you.
Livestock----cattle subindex
Hogs----subindex
In general, there will be bull and bear market rotation within the entire commodity group.
Knowledge is the enemy of fear
Liberty: Parent of Science & Industry
cattle - 6.1%
wheat -12.7%
gold -23.6%
silver -33.9%
OTOH
corn +2.7%
soybeans + 12.9%
hogs +19.2%
(we loves us some bacon
Liberty: Parent of Science & Industry
Never bet against the American farmer.
Knowledge is the enemy of fear