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"Michelle", very beautiful song. The guys had loads of talent. You think Pete Best kinda ate his heart out all these years. Probably plays "Yesterday", a lot. Poor fellow. Gulps to ya, Pufs too.
STUDIO_R, Namaste...2nd quart thoughts...and I must say peyote' truth..
contact ARAGORNIII, NAMASTE' me and a parafin turtle are getting ready to play pinball, I fear for the litle,....after this next weekend, I have to go to Kentucky, nuff said...
Where I go there, no phones, nada, into the hills...
"... most fortune 500 Corps are well along in their Y2K progams & cites GM as a Y2K success story."
I wouldn't believe everything I hear, and I don't care what credentials are being thrown around. I have seen very little evidence of compliance from ANY Fortune 500 companies, the LEAST of which being GM. I will be convinced SOMEWHAT, IF AND ONLY IF I see John Smith's hancock on GM letterhead stating so. If I were you, I would not rest easy until you see same. Making such a statement is not a difficult thing to do, that is unless it is not true.
GM has 5,000+ vendors that conduct business with them electronically,
any of which, and likely many of which are not compliant.
Also, for anyone who is in the mood to research, if you look up
the GM website, it says absolutely ZERO about y2k. Do a search.
If they were confident about compliance, why would they not at
least mention it, if not trumpet it, given the internet and the
role it plays in information these days.
Tis a gold stock. I will be an investor in US govt securities 100% at least for the time being. The term "go with the trend" comes to mind concerning gold and the market. The best offense is the best defense.
Originally pharmaceuticals for medicinal purposes and for other purposes...have origins which came almost entirely from the world of medicinal herbs, these days, most of which are created artificially in a laboratory. All of your modern day drugs are either mimicked in format to a dominant characteristic of an herb or to predominantly occurring brain chemicals that create the sought benefits ( or detriments ) . The problem is, when you bombard the body with a single property, it cannot, and will never be capable of, mimicking a naturally occurring herb or brain chemical and it's infinite subtleties along with perfect and precise quantities to effect the brain/body in a totally positive way. Thus, you have side effects.
GM has only spent 10% of it's Y2k repair money.
They need say no more.
Time is the essence.
And they don't have enough.
~~~~~~~~
Gollum
A rally for a week then to fall on it's face???
Wouldn't surprise me at all.
But then, we could still have one more leg to go.
I haven't been watching the charts close enough.
But there's still so much money out there.
They could ramp it up for another leg.
They still have the power to move these markets.
Down but not out.
Down and could go up
We'll have to wait and see....
As for gold, silver and the Dow?
All our expectations seem to take a lot longer to come about.
What we see, could well come to be.
But never as quickly as we believe.
This becomes more noticable the more we observe....
Most side effects seem worse than the cure. One tells women not to touch the pill, that it could cause a certain birth defect. These awsome side effects are always down--played.
Even if there is no crash of systems, the velocity of money in the economy stands a high chance of being slowed down. It is almost a certainty that just perceptions of liquidity problems will cause more people to hold cash which, coupled with the reserve multiplier of bank lending, will temporarily cause liquid cash to become scarce.
If non-compliant Y2K participants, in the vast and fast moving international interbank monetary system, cause the system to slow down for any reason, slowed payments will ripple throughout the system quickly.
Who cares, right? Well from macroeconomic theory MV=PQ where
M=Money Supply
V=Velocity of money
P=Prices
Q=GNP
If velocity decrease, either M must increase or PQ must decrease in some combination. A money supply increase would be inflationary ( or should be ) . A decrease in P or Q would be a deflationary scenario where output falls and prices must be reduced to induce money back into the marketplace.
I feel the Federal Reserve will pump liquidity ( money/deposits ) into the markets instead of opting for a slowing economy. The bubble effectively gets bigger becasue of Y2K.
The risk of panic, which will pop the bubble, is also a high probability event. With reserve requirements at 3% of transaction accounts, money will quickly leave the banking system if people run on the banks.
I can tell you that the charts are calling for 8184 after this rally, then later a final low of 7390. Wee are at the point where crashes start. Use this rally to sell. Bonds will do well as Asian money is comming in to safe haven investments.
Your 1:30 is a "bingo". There are also hundreds of co-factors in herbs that work together. Some balance out others. To take one out is an abberation. Take penicillin. It was found in a mold. Scientists got an idea to find the "magic bullet" and concentrate it. The mold, however, evolved over millions of years with hundreds of co-factors. Even the herb knew the cofactors helped to prevent resistance. Thus the mess we're in today.
Market tecnicals are horrible. New higs vs new lows, advance-decline. Stocks under moving averages. It takies time for people to change their positive image of the market. It is very expensive. By the time they do get it, they have lost 15--20% of vtheir money.
OUR CIVILIZATION IS TIED TO THE TRACKS
On Wednesday, July 15, U.S. Senator Robert Bennett gave an amazing speech to the National Press Club in Washington. It dovetailed with President Clinton's speech on Y2K to the National Academy of Sciences. Senator Bennett is Chairman of the special Senate committee on the Year 2000 Problem. In his speech, he made an extraordinary admission:
I believe we're going to win; that is I think that civilization as we know it is not going to come to an end. It's a possibility.
Possibility, if Y2K were this weekend instead of 76 weekends from now, it would. But we have 76 weeks in which to try to get this under control.
I have never read anything like this in any peacetime speech by any politician. In wartime, politicians speak this way. In peacetime, we never hear such rhetoric.
Why now? Because Sen. Bennett is not using stand-alone rhetoric. He is drawing a legitimate conclusion from the factual record.
In the question and answer session, this exchange took place:
Sir, a final question today from a veteran journalist. Why don't we just forget about all this computer nonsense and go back to using typewriters? Life was simpler in the old days.
Your comment, please?
SEN. BENNETT: Well, first you're going to have to find one! ( Laughter. )
But I go back to my statement when I gave you that somewhat convoluted description of how the economy has changed in the information age, we can't go back to typewriters. We can't go back to 25 years ago. We can't just forget about this problem because 25 years ago doesn't exist.
Somebody asked it in a different context, but the same question: "Why are we worried about the fact that the switches that control the rail traffic in this country are all computerized? Let's go
back to somebody standing there and throwing the switch in advance of the train." There are no
switches to throw. All of the manual switches have been replaced. . . .
We cannot go back because the infrastructure that undergirded our entire society 25 years ago has been dismantled. It is gone. The skills are gone, the people are gone, the equipment is gone.
Like or not, we have no choice in this situation but to plow forward and, one way or the other,
make it work.
This goes to the heart of the matter: the train switches. They are all computerized. They are all vulnerable to the Millennium Bug.
Without trains, there will be no grain deliveries to the cities. There will be no bread.
Without trains, there will be no coal shipments to the power generation plants. A large city needs at least three mile-long trains loaded with coal every day. The power will shut off.
Without trains, the chemical industry ceases to operate. That means the modern economy will cease.
Western civilization is tied to the tracks. It's like the old melodramas, the old "Perils of Pauline" weekly serial. We can hear the train coming. Yet it's all a big hoot for most people who do hear it -- and very few do. It isn't real. It's as if people were on an amusement park thrill ride. "Hey, this is really exciting!" It sure is.
We have 76 weeks. There is no plan to untie us all from the tracks. The train cannot be stopped. It's on schedule, and it will stay on schedule. There is no way to switch it so that it goes down another track, the way the hero would do it at the beginning of Chapter 9 of the serial.
Mr. Bennett says he thinks we can win. I ask: Why?
What evidence does he have that indicates that the problem of embedded chips is being solved, that the data interconnection problem has a solution, or that most companies around the world have even begun their y2k repairs, let alone are close to compliance? He has no such evidence. There is none.
What can happen in the next 76 weeks that will get our civilization off those tracks? No one has an answer.
That's because there is no technical, institutional answer.
He went on. The embedded chip problem must be acknowledged, he said. It's bigger than most people imagine. Recall that something in the range of 25 billion chips have been installed, worldwide. By 2000, this may approach 50 billion. Bennett said:
And the estimates we get on our committee are that between 2 ( percent ) and possibly 5 percent of those chips will fail. And you don't know which 2 ( percent ) to 5 percent they are, and you don't know where they are.
Consider how many defective chips he is talking about.
If it's as high as a 5% defect rate, and there will be 50 billion chips in place in 2000, that's 2.5 billion defective chips.
If there were a hundred thousand highly skilled technical workers who had the tools and training to identify defective chips and replace them by hand -- assuming that this can be done, that there are compliant replacement chips, and that they will fit the old motherboards -- each worker would have to replace 25,000 chips by 2000. That means 500 a day. It is not possible.
It will not be attempted. This raises a scary prospect, as Bennett sees:
But if all of a sudden the pipeline that is bringing natural gas to the generating plant that is creating the electricity that's lighting these lights shuts down because an embedded chip in one
of the valves fails, it isn't just a valve in a pipeline that has failed, the whole power grid is now at risk. And if enough of them fail in enough key places, you don't have any power.
Read it again: "you don't have any power." You.
YOU!!!! Do you understand what he is saying?
Intellectually, maybe. Emotionally? Probably not.
I have been saying the same thing for a year and a half. The power grid is the Big One. On it hangs the fate of this civilization. Yet my readers sit there, read this, nod their agreement, and go on to something else -- some other project that they regard as more pressing.
The fifth day in a row that the power is off and the water system is off, they will recognize what pressing issues really are. But it will be too late.
Critics have attacked me as a scaremonger, an alarmist, and a fraud -- at best, an amusing diversion. But a U.S. Senator has now put his reputation on the line in front of the reporters' guild. None of them indicated that they think he is some kind of fool, some money - grubbing charlatan. ( As the former CEO of the gigantic Franklin-Covey time management organization, Mr. Bennett isn't in politics for the money. )
Yet reporters sat there, listened, reported what they heard, and do not allow the information to affect their decisions. They are like sleepwalkers heading for a cliff. So are their readers.
I am not sufficiently gifted rhetorically to penetrate the denial of more than 20% of my readers. It's probably more like 10%. A few do see. The rest sit there, paralyzed by denial, or paralyzed by their fear of spouses who will not listen, who choose not to listen.
75 weeks. 74 weeks. 60 weeks. 50 weeks. Which week will you tell yourself, "There is no escape. I've got to get off these tracks"?
The train is coming. It cannot be stopped. You must get out of the way. If you wait until your next door neighbor sees the train's headlight, neither of you will be have time to wiggle free and run.
Most of my readers, despite months of warning, will panic when only their neighbors do. They will have squandered their advantage.
What about you?
What is the single most important decision you can make right now? Buy some land with its own water well that can be pumped without being hooked up to the local power company. This can be as little as half an acre. You must have water. Everything else you can buy is secondary.
Next, locate a local food cooperative and buy 500 pounds of wheat, 500 pounds of corn, and 250 pounds of soybeans for each adult member of your family. That's a two-year supply. It's cheap. Get it while you can. Bread made with a 40-40-20 mixture has the basic amino acids.
Don't tell the co-op person why you're doing this.
Finally, buy a grain grinder, preferably one that can be operated by hand and electricity. A few solar panels, some 12-volt golf cart batteries, and an inverter to convert 12-volt d/c to 110 a/c are also good ideas.
I've tried it but the downer when I come off it is not worth it.
Though on some days one or two capsules do seem to help.
So does an extra Centrum and a cup of coffee.
My diet is so unbalanced that if I skip the Centrums for a few days
I get to be in a foul mood.
But sometimes that happens in spite of Centrums and St. Johns Wort!
I printed your post concerning future means of conducting commerce. I guess it was the cashless society.I have always been interested in Revelations. I really enjoyed the post. Gollum might tell you about the markets. I usually make money listening to him. Even though I harass him, he is quite knowledgeable.There is an organization whose proponents created the UN that has an agenda that is very interesting, if not sinister.
Salty
A tree squirrel when ON THE GROUND becomes a GROUND
squirrel .. when he climbs back into the TREE he
becomes a TREE squirrel ..
I have many in my oak trees .. A few years ago a tree
squirrel was ground borne and in the process of
re-defining himself .. and Ben caught him and ate him
up .. fur tail and all.
He had been RE-defined as lunch.
It comes in 150mg and 300mg. It takes 900mg to be effective ( I saw it on CNN ) . My brother was taking 2 capsules a day. Not enough. Got to have 900mgs. I bet this information will help you .
You are right on about coffee...It can bail you out. Temporary, but welcome. The wort will work at proper levels. You should'nt have any hangover since it is an herb. I'm no expert. Dr Welby type. I'm just a blind pig looking for an acorn.
I can't swing much in PMs. Especially when I buy a new shotgun.
I've got eightysome Silver Eagles and a tad over 1oz of Gold.
I would love to buy more 1/10 oz Maple Leafs but shall not because
1 ) I feel as you do that the bottom is not in yet.
2 ) I want to keep some powder dry for the 10-grainer.
P.S. My negative feelings about my retail outlook before Y2K
has me selling down inventory and being VERY stingy in ordering more.
I may be out of business by the spring of 2000.
Then I can get on with important things - like reading & writing
and maybe even wife & family {the Nuts have gone to my head!}
Maybe I could raise kids with the old frugal, conservative values
if Y2K succeeds in preventing the liberal SS from interfering.
Those of us you really get prepared for Y2K will be bummed out
if it does not happen to the degree we are concerned about.
Maybe some hard cases will blow up things just to help it along.
The first few weeks and months of 2000 could be very interesting!
My charts say y2k is good for Clinton. The more we are diverted, the more power he will steal. Under our noses. It will provide cover for his devilment.
The skirts are long. There you go Sharefin. There's proff.. Sell, selll, sell.
The girls are sooo skinny.I'd like to fatten that one up and pork her. Suuuuui pig,pig,pig.
EB has not lost his Disney bet just yet. He has a winning track record here at Kitco. Would appreciate a more courteous and respectful attitude toward your fellow Kitcoites.
A worthy repository to store the product of labor, to store the life expended in labor, will have the quality of lastingness. It will last from generation to generation. Paper scrip has it not. Paper scrip burns, rots, fades, and wears out. It is a mere hand to mouth store of value, readily devalued, appropriate for the hand to mouth existence of slaves. Gold has it. The earthly wealth stored in gold lasts and lasts. That is why it is the best money. This feature of permananence is also why gold has so little appeal as money to persons with no sense of permanent principle or spiritual value. Nothing is more inconvenient to a government which issues fiat paper scrip for money as people of inner fixedness.
No one knows for sure when this Bear will end, we can only make educated judgments. Many of us have thot for a long time it should have ended by now. Obviously we have been wrong. Is it the threat of the CBs selling more? Is the Asian thing now a big factor. Is gold et al really no longer a major factor in economic life? Etc. To answer the last question I would say the volume of trading on the London market indicates gold is still of considerable significance. I doubt gold is not looked upon with favor in Asia after the devaluations of paper. And will the CB really sell more? That is the major question in my book. What is the trend of their selling. Seems to have decreased lately? Or do the movers and shakers in this arena still think gold is no longer a major factor and will they continue to sell? My guess, and that is all most of can do, the Asian thing has opened a few of their eyes and they may be starting to think the paper needs gold backing. After all, the euro will have 15% of its backing in gold we learned recently. That leaves gold to sell in some Europeon CBs, but will they sell? My hunch is not much, if any. The odds are the Swiss people will not OK the selling of Swiss gold in their referendum. So, I still think Gold is hardly dead. Is the bear near its end? I think we are getting close. But then, I have been thinking that for some time ;- )
@ Goldbug23: I think the bear will end when the USD finally
seeks its true value. When Nixon violated Bretton Woods, the
various signatories of that agreement watched Uncle Sam print
USD at will, ( how do you think the USG can fund 8 aircraft carriers,
billion dollar stealth bombers and NASA. They print dollars, and
give paper for substance! The world has paid for these things! )
various European nations decided that an alternative to the USD
was necessary lest the USG bankrupt the world. I suspect the
decision to introduce the EURO was taken back in 1988, a substitute
currency to the USD. Lease rates were introduced to control the
POG by driving it down so that European CBs could acquire more.
Selling by CBs is now at half the rate of the past two years, and
the last two years were just slightly above normal. Some of these
so-called 'sales' were actually transfers between CBs.
We are in the end game now, and it is going to be very painful.
The game ends in Jan 1999, when it will be in the interest of
European CBs to let the POG RISE to magnify the importance of that
15% gold backing you mentioned. Remember, the idea is to destroy
the USD as the only world reserve currency. When the POG goes up,
the USD goes down. Competition from the EURO in 1999 should accomplish
this by itself, but letting POG rise will accelerate the decline of
the USD. European nations hold both gold ( high %tages ) and dollars
in their reserves. As the USD goes down, POG rises. By holding
gold they are not hurt. So this excess gold is not excess. It is
being held for the great recompense in 1999. Remember, it is European
CBs that have been the heaviest leasers of gold. The Americans
can't lease. When the Europeans stop leasing, the short overhang
amounting to 3 years total world production must be covered.
It is going to be breathtaking. IMHO
Your theory of how things will work out sounds good to me - its the one I'm following. I read something that said that Euro countires value their USD reserves at the end of '98 for transfer into the European Bank. They want to keep the value of those assets up until the valuation. Having read that I could held off buying any metal mining stock. Fits into the leasing control of gold and the dollar
Of course the CB won't have to worry about keeping gold down in the yen keeps declining or the Chinese devalue which I personally don't think they will publically until it is evident that the black market for their Yuan or RMB is 15% over the offical rate..
Gold and Silver will be kept down for the remainder of the year due to recessionary preasures similar to those effecting all commodities. A stock market sell off will only heighthen recessionary fears. One way or another we are going lower in the metals though the new year will mark a whole new beginning from what ever levels we descend to as you well describe.
ADDENDUM to my 6:28> The question arises, what the US is going
to do in retaliation/defense in 1999. They could:
1. Sell Fort Knox. This would require an act of Congress, and it
was tried once before, and did not head off the rise in POG.
2. Lease gold from Fort Knox. This would require an Act of Congress
too, but allows the FRB to eat its cake and have it too.
This is highly likely. There are 8000 tons to lease.
3. Arm twist Uncle Sam's 'allies' ( puppet states ) into selling their
gold reserves. This has mostly already been done. Canada
has sold over 80% of her gold reserves, and Australia the bulk of
hers and Argentina cashed out last year. There is still Gt Britain
with significant reserves and others who might be coerced.
4. Use the IMF to completely ruin shakey economies and force dishoarding
of CB gold. This has been done in Korea, Thailand, and may be
further applied to to Russia.
5. Ban the private ownership of gold, to head off the demand curve.
They have been there, and done that. The US and its 'allies' are
not big centers of gold consumption.
6. Seize or control world centers of gold production: Canada and Australia are already under control, and that leaves just South Africa. IMF may seek to 'aid' South Africa.
The last two possiblilities are extreme strategies, but these are
extreme times. IMHO
All: I'm not so sure this is the end of the US markets -- I like the Worden Bros reasoning that we are in a bear market now, but also in a long term bull market -- to be resumed at a later date -- perhaps after y2k.
The reason for this optimism -- the crop of baby boomers coming of age in the US -- spending peak about 2010. Then major downhill risk and inflation risk. We do have a potentially strong economic cushion -- the computer revolution. But it does require that someone can afford to buy the computers.
However, I do agree that the US markets are dangerously near the brink right now, for several reasons -- no savings cushion, excessive debt and major foreign investment. Americans have a boom-bust history going back generations, but a bust now could be worse than previous ones, given our new emphasis on debt. The US can no longer ignore the rest of the world, and focus on internal matters -- but we still naively act as if we can. Can't if you are 1.5+ trillion in debt to foreign investors. Part of the reason that we have so little savings is that the younger baby boomers don't have any, and most of the older ones like me do not worry about saving for a rainy day.
I think we will not be out of the woods, worldwide economy-wise, until SEAsia recovers from its current problems. China must bottom, as well as Japan. This will also be the time when there will be serious competition with the US dollar. Probably not the EURO.
The only thing that I think would make the EURO serious competition now would be some economic advantage, like easier/cheaper/more confidential use of derivatives. For example -- is the EURO y2k compliant? And -- why does the LME, LBMA do such good business if the Europe is no economic threat to the US? I think we are missing something.
Other worries right now: South America, and Canada. The Canadian dollar has dropped 10% in about 6 months -- is it following the way of SEAsia, triggered in part by a runaway US dollar? I hope not, but the scenario of rolling devaluations seems to be spreading like a cancer. Mexico looks bad, and Venezuela worse. Alot of American investment in South America. I don't know about Canada, although I do no that US fortunes are mirrored there. I like Canada because it is more international, and because the Candian society is more harmonious and peaceful -- like the US years ago. Lots of wilderness, too. On the other hand, Canadian socialism is way ahead of the US. I also look to all of those great economizing moves in Alberta, and wonder why we are incapable of doing the same in the US.
One question we need to ask ourselves is just how far commodity prices can drop if the rolling devaluations spread around the world. Could be that commodity prices could drop alot more. If so the dollar price of gold could very well drop some more. ( or the US dollar rise ) . That would not be good at all.
My guess is that if the US markets plummet this year -- or by y2k, it will be because of international problems, such as a major US identity crisis generated by WJC's desire to deny all of his escapades, and thumb his nose at the impeachment proceedings. That, with some international incident where American leadership is needed and found wanting, would probably give us a nasty bear. And if the bear is bad enough our debt problem could cause the implosion we Kitcoites fear.
All I can say is that we are moving through uncharted waters, because so few of us are familiar with such deflationary times. One reason for this is that our fiat currency gurus have tried to eliminate all of the recessions by using monetary stimuli. Well -- it has worked to some degree -- making the fiat/debt approach riskier and riskier. The only problem now is that when we do have our debt created implosion, it will be the great grandaddy of one. Personally I prefer the ups and downs of the business cycle to the feeling of impending doom ( sometime within the next 15 years or so ) , regardless of what happens outside the US.
Sorry: I meant to say that the US market demise before or at y2k would probably be because of internal problems, such as WJC impeachment, or international problems due to the inability of the US to function effectively in foreign affairs -- creating or failing to fix some international crisis.
http://www.buzzbyte.com/scenarios.html 12:03 a.m. - The Rainbow Room, Manhattan. A cocky 26-year-old stockbroker hosts a party of 20 at one of the most exclusive millennium celebrations in town. He's jubilant. Although the Dow's been down for months and the economy is teetering towards recession, he earned huge bonuses in 1999 by identifying the companies behind in defeating the Year 2000 Bug and advising clients to sell short. When required mid-year Security and Exchange Commission reports came out detailing which companies were behind, he made a windfall. After a full-course meal and lots of champagne, the broker whips out his credit card to pay the bill. Moments later he's told his American Express card has "expired."
sharefin: Good to hear your house is almost sold. You have time. I still have some gold equities, and am tempted to hold into them ( dumb gold bug that I am ) . Any thought about whether the corner we are about to turn is just this side of the ( gold ) abyss?
There is no question that gold is bottoming. The only real question is whether we are about to have a major gold fire sale due to more rolling devaluations before the US dollar drops. Right now, it looks more and more like the US dollar will really be the last to fall. Not good for global gold equities -- even if profit margins are rising due to local conditions. And -- silver is heading in the wrong direction -- looks more and more like the second big rally is not just around the corner. Could be the fiat currency gurus want to push gold down for one last time, despite the obvious risks of losing more gold to non CB sites. Eventually the BIS will step in and buy, if the CB's fail to police themselves. That is a given.
Most of my assets are in cash, but like most of us, I am not totally financially independent. Still need my day job. So any losses are fairly dear, even short term ones. Hard to plan when you don't know whether to plan for inflation or deflation. Inflation if AG succeeds this time around, deflation and debt collapse if he does not.
@ Mr. Mick: If one accepts the premise that the USD is 30%
overvalued, then the correction should boost gold to about $400.
But this does not take into account all those excess printed dollars
out there that were acquired prior to the Asian Crisis.
Wm Duisenberg let slip that the proposed gold backing would be
27% ( back in April '99 I think ) This implies a virtual doubling
of the POG, because the present gold backing of the EURO is 15%
I think the ECB wants to let the price of gold rise till that
15% backing becomes 27%, but I don't know how they are going to
stop the short squeeze from turning a hoped-for doubling into a
tripling or quadrupling.
Leasing gold is great for dropping POG, but the longer the drop,
the higher, and faster the rebound. We are at a point now, where
the entire world gold output is virtually uneconomic, and has been
for about 18 months. The last time this was done was pre 1980, and
gold went to $800 per oz then in 1980 dollars. I think we could see
$1200 gold, and it could go higher. I hope it doesn't. Yes,
I HOPE IT DOESN'T! If gold goes higher than that, that implies massive
inflation, which means we shall be sitting here with gold and gold
stocks that are exploding upwards, and wondering if we should sell
out to acquire dollars which are shrinking in value.
sharefin: I thought you were going to tell us that the y2k broker guru made a fortune selling other non-y2k companies short, forgetting to check that his own brokerage firm ( or bank ) really was y2k compliant, and lost it all. Or -- perhaps on the way home his elevator developed a y2k bug on the 30th floor, overheated, and dropped faster than the stocks he was selling short. Or -- perhaps the local air traffic controller mistakenly routed a landing 747 through the 25th story of his NY highrise. Those nasty little transponder codes got scrambled because no one could afford to upgrade the ATC computer.
Hope all is well -- off for chores.
JTF
If gold & silver prices don't improve before the end of the year there
will be some heavy duty selling of gold & silver shares. Most of my
gold & silver stocks are off at least 45%. ALot of people bought
ABX in the in low 20"s , TVX in the lows 4's and will be unloading
to offset taxable gains. Some of my picks ( canyon resources &
silver standard ) have been disasters.
People who would want to convert their tradional IRA,s to Roth
IRA's could use their PM share losses to offset the tax due on
for the Roth conversion. The only PM stock I'll be holding if gold
and silver prices remain the same will be PAASF, all my others
will be sold by the end of November.
Bufford: On tax loss selling, I thought you could only deduct investment losses of a maximum of $3000/year. How does one convert IRA's to Roth IRA's in that situation?
in precious metals this year, and at this point it looks extremely likely, wouldn't that event set the stage for a very strong bottom and rally in the PMs? I think that is what occurred early this year after last years slide. We had a rally for a few months and then back to test the bottoms. If it happens again, I suppose that the PMs will be so oversold that they will be virtually risk free.
If we are at the base of a long term gold bull,
And the US$$ is to be the last bastion.
Then perhaps there is a way to go before gold starts to rise.
Seems to me that there is a correlation between the POG and the Dow and US$$.
I doubt that the POG will advance strongly till the other two pull back strongly.
The bull runs in both markets and gold during the late 80's were part of the inflationary times.
Not the same as now and not likely to be similiar.
My guess for the time for gold to start to move would have to be next year.
Like the trend on the Dow, it is seems to be turning, could be turning, should be turning.
But that is what we are looking for, hoping for.
And not what is really happening.
I think we need the confirmative turn in place before taking a position.
Patience and more patience.
And lots of caution.
As to take your pick.
I think a lot of kitcoites could come up with a better list.
A few examples a bit more imaginative???
Bob Brinker*****Says dow a buy under 8650 no need to worry
I listened to Bob Brinker yesterday and he is callin a buy on the market
below 8650. He came down hard on Ralphie boys bear call and
compared him to Elaine Boozaralli's bear call in July of 1996 when
she warned her clients to get out inat 5600 the low of the year.
Brinker has made his listeners alot of money since the early 90's and
has been right on when it comes to deciding at whether to dollar cost
average or lum sum it in to the market at the various times in the 90's.
He has been a bear on gold since the early 80's and recommends
using the Vanguard total stock index & ginnie mae funds . The expenses in some the Vanguard funds are only 0.25 % . Unfortunately
I never folllowed his advice for if I did I would have had a $160K gain
instead of a $35k loss for maintaining my goldbug posture over the last
3 years
Suppose you wanted to convert a $40K IRA to a Roth IRA someone
in the 25% income tax bracket would have to pay $10K in taxes over
the next 4 years. You are right about the $3k annual limit but I thought
you can carry over losses for three years and use the decductions on
tax returns in the following years.
I wish they raise the loss limit for $30K this year the way PM stocks are
performingr
Suppose you wanted to convert a $40K IRA to a Roth IRA someone
in the 25% income tax bracket would have to pay $10K in taxes over
the next 4 years. You are right about the $3k annual limit but I thought
you can carry over losses for three years and use the decductions on
tax returns in the following years.
I wish the raise the loss limit for $30K this year the way PM stocks are
performingr
@Lenaxe ****selling so far just tip of the iceberg
Lenaxe,
Just from reading posts here over the past year you can get a feel
of where some of the audience has purchased their pm shares.
The end of the year will be a pm share buying opportunity after
all the tax loss selling is over. Pm shares won't go anywhere
until PM funds start buying shares. ( Look in barons market watch
section this week ) .
I have been receiving an excessive amount pm newsletter advertisements over the past several weeks and alot of the former
gold newletter writers are now technology experts. I have never
made on predictions here in the past but I'll go on record as saying
the PM bottom will be in when Jim Blanchard starts writing a
technology stock letter. These guys must be starving with some
brazen pm picks over the last several years and are in dire need
of some new funds for Xmas.
Here's one you might want to try...Depremin -- a new form of St. John's Wort that also has a calming and muscle-relaxing effect, and is 5 times as absorbable as any other form.
Could somebody give me informations on AngloAmerican Platinum. Formerly listed on Nasdaq as AAPTY, AngloAmerican Platinum, despite a big runup in the price of platinum over the past year, delisted and relegated to the world of pinksheet.Stock was about $20 a year or so ago, recently dropped to $10 or $11 and just as mysteriously traded at $14 last week. Are they a part of ANGLY?
Hmmmmmmmmmmmmmmmmmmmmmmmmmm, lazy and hazy on the Island today...
Sitting here with TinTin and Piglet, Umbrellas up amidst a torrent of pumpkin seedsSnowy is stranded nearby, although we each find our storms, this week will bring a major move in the metalsand dont forgetever
At all costssave the tequila.and make sure the peyote is well soaked and and now back to the vitriolic task underfootyesyeshoovesPiglet can be devastatingly forthright more tequila and where in Gods good green earth are those buttons
These then are the decided things which must be valued and adhered toHonor, forgiveness, comfort to others before one thinks of selfand in the illustrious words of the good man from Austria, Dr. Coffer dont ya know?.yesyesnow lad, on with the music
and a little known thought..What Sandy Berger knows about foreign policy my
Father taught me by the age of seven...distractions...what a putz...truly our fields are barren if this be the crop harvested and we have Sandy Berger and Clintler...if America does not stop clinging to this white bred crap it will die...let loose the sons and daughters who appreciate the Republic...those who came from other countries to these shores...OUR strength is found within our diversity.
America is not just a country...it is the demand for freedom found within the breech of each of our souls
Sanctimonious speeches, children starve, murder, deceit, and the UN, Koffiwhat a pathetic excuse for a man
And you know whatmoney from your pockets arrive in the form of his paycheckKoffimy American ass
Wake the F_ck up and stop the crimes you fund during your bouts of apathy
The very thought that one of Americas fine men and women may give their life for such human excrement sickens mesickens me
MARIO CUOMO DON'T SPEAK FOR NY...what a sckutch...I have more respect for that piece of a scab that comes off in between the adhesive, the bandage and your self-healing skin
Mario Cuomo is nothing more than the foreskin that survived the ordeal...
no more, no less...I understand the term is political hack...I prefer the
definition...................money taking scumbag...
YO! Mario, I hear you are sinister...ah, ha, ha, ha, ha...MARIO CUOMO is garbage, tie it tight or the smell will fill your nostrils...
Third in the House of ARAGORN, and a mighty gulp to ya...
Leo shall be posted on Monday...FED EX...Colt Python held to each and every one of their temples until it arrives safe and sound at your abode...hit play...enjoy...Namaste'
glenn, Namaste and a gulp to ya...think about IT...How can something of value be
measured by that which has no value...dollar ( supposed ) value of gold... goodness gracious me...wake up to the smell of coffee...give your brain some time off so it can think...
See my posts with Mr. Mick beginning with Sat Aug 08 1998 08:10.
my grocery store example understates my premise because I say "I think".
Even stronger is that MY CUSTOMERS exhibit behavior verifing my premise.
"I think shoppers out at the grocery store are not equating the folding stuff in their wallet or the value of their credit limit with how much Gold or Silver it is equivalent to. They regard their "money" only as a means to buy hamburger, cigarettes, ice cream and tomatoes. What Gold and Silver are trading for today or tomorrow are is as far removed from their minds as what ginseng is trading for in the far east."
glenn: two profound experts with a track record - one an Elliot Wave theorist and the other Martin Armstrong. GIVE ME A BREAK! I have read Martin Armstrong's work and IMHO he is 99% opinion and 1% substance.
Gold at $192 and silver at $3 per MA? Maybe. Anything is possible and I could, if I thought hard enough, come up with a scenario that would lead to that outcome. However, I would only give that scenario a negligible probability of actually happening, and I sure wouldn't want to be around if it did!
As for EW, it has been my observation that these theorists stare at charts for hours trying to interpret which wave is being played out. It is even unclear whether the wave is up or down! Like all technical analysis, it is so clear after the fact and one can trace wave patterns on price history. It is not so easy to do so while it is happening.
Sorry glenn, but I am not going to sell my gold or silver. I am not going to sell my mining stocks. Rather, I will continue to dollar average my way into the positions I want to establish. Then after the prices have appreciated to my targets, I will sell them to you ( as sure a sign of the top as your advice today is a sign of a bottom ) !
Leland, you posted the URL for Colin's news. One of those item's I think is worthy of special attention, not just for its discussion of yuan devaluation, but for China/Japan dialogue and cooperation:
http://biz.yahoo.com/finance/980809/china_japa_1.html Somehow I think these two countries share a common disinterest in having fiat money controlled by the US fed as their reserve currency. Their ability to do something about this is enhanced by cooperation.
...says, "While the trend prior to 1980 was anything but America, the post-1980 trend quickly became America only. Virtually every major multinational manufacturer set up shop inside the US. " Hell, every American manufacturer I know of is going to Mexico, the Carribean, or Central America to lower their labor costs. Fruit-of-the-Loom, Hanes, and other sportswear manufacturers do very little sewing in the US anymore. GM is on its way out of the US. All the Dodge trucks are built in Mexico now. Nissan, which built an auto plant in the US in the 80's, is even leaving from what I understand. Hey, Martin, what are you talkin' about!
I have been reading Auger's and Kaplan's posts since the beginning of the year. There is a definite divergence of opinion between the technical and fundament camps. But there also may be some common ground. Kaplan is EXTREMELY bullish, hinging much of his argument on the large long position of commercials. Auger states that gold will visit $200/oz and the XAU 35 some time in the near future. However, Auger also states there will be an intermediate bounce in the POG to US$315 before its eventual demise. At or about US$315/oz, based on the spring rally to US$317, many mining shares may double in value. Could it be that the very short-term POG/XAU is down through August followed by a short covering rally followed by lower prices? Comments!
Did Jimmy Dines ( not the pork sausage guy ) newsletter mention
something about real estate collapsing next year? If so, does
anyone have a site? Thanks
But my faith in how much value it may have has been undermined.
One Grain of Gold today may buy a cup of coffee.
In two months I may need two Grains to buy that same cup.
I too would love some permanent, stable, indestructable, widely-held, circulating, easily exchangeable, repository for the fruits of my labors.
Gold is not it, neither is Silver.
When I bought Gold I lost money - my store of value decreased in value.
Many here wail at any slight upon Gold's reputation.
I understand their plight - they hold a lot of it - physical & paper.
There are times when one must gulp & swallow one's losses and move on.
For a time in my store I stocked various and sundry artist paints - acrylics, oils, watercolors, etc. Because I had faith in the value of such stock I talked a merchant friend into carrying lines of artist paints that I did not.The market did not value them for what I felt they were worth - we both lost money on them. I railed about how local artists do not support my carrying such stock. Eventually I sold off such stock at or below cost to liquidate my investment in order to invest in stock with a better return. My friend still has most of her stock. Because she is an artist she may be more reluctant to admit that others do not value such stock as much as she does. She has not swallowed hard, liquidated it and moved that capital into lines with a better return. Thus she, like many here, sit on a stock that diminishes in value and gets harder and harder to sell. Yes she is angry - at those who do not buy and at me for talking her into such an investment.
This month I will finally unload the last of this dead stock. Some of the proceeds from earlier liquidation went into Silver Maple Leafs - which did sell. Now I am trying Silver Eagles. If they do not sell well enough I will roll that capital into something else - perhaps foods with long, long shelf lives. They should retain their value for a decade and, if chaos ensues, perhaps quadruple in value. If chaos does not ensue and they don't sell, at least I can eat them. They will still have the same value to me as when I bought them - unlike the Gold I mistakenly bought.
There have been stirrings in Asia for several months that
a counterpart to the Euro may be in the beginning stages.
You made an astute observation on the China - Japan alliance.
Please share any new developments that you find. Thanks.
gold, like the truth can only be sequestered for so long, the lie, as an animal hit by a car
lays on the highway, as that body bursts, exploded by the maggots insatiable, so too shall gold interject its majesty unto a world filled with falsehoods and once again attain its rightful status...the minds of man are sedulous...
LONDON'S DAILY TELEGRAPH REPORTS INDIA AND PAKISTAN ON VERGE OF ALL-OUT
London's Daily Telegraph's Sunday edition reports: "shelling along the 450-mile Line of Control dividing Indian and Pakistani Kashmir has increased fears that the region is heading for all-out war. Given that both India and Pakistan have recently tested nuclear devices, the conflict could be catastrophic. Two of India and Pakistan's three wars have been fought over Kashmir. The present border bombardment, which locals describe as heavier than that during the entire 1948 and 1965 wars put together, has seen an estimated 50,000 rounds of ammunition expended so far, and heavy artillery used for the first time."
OK...I'll try the day crowd...a SERIOUS QUESTION that deserves serious thought...
When the bubble bursts...Where do the "powers that be" plan to park their wealth??? They must have a plan. The really big boys do NOT go bust in man-made disasters...they get bigger. Anyone?... Everyone? ( this may or may not include gold... )
Sheesh, what does underlining and highlighting have to do with an article? What dangerous, hidden meanings are intended by such?
You are by far one of the most intelligent posters on this forum and have the ability to communicate your ideas clearly except for the above.
You have asked me in the past to substantiate the articles I post re: conspiracies. That is the same as my asking you to unsubstantiate them.
The following excerpt from the Illuminati article of Myron Fagans credentials:
ABOUT THE SPEAKER
"WHO'S WHO IN THE THEATER" has always been the Bible of the People in the
Legitimate Theater. It never played Favorites, it told no lies, it Glorified nobody. It
always was an unbiased HISTORY of the men and women in the Theater. It always
was an unbiased HISTORY of the men and women in the Theater. It recorded only
those who proved their worth in the one - AND ONLY ONE - testing place of the
Theater. BROADWAY: That "WHO'S WHO" records the plays Myron C. Fagan
wrote, directed and produced ... Dramas, Comedies, Melodramas, Mysteries,
Allegories, Farces - many of them the most resounding "HITS" of their years. He
arrived on Broadway in 1907, 19 years old, the youngest playwright in the history of
the American Theater. In the following years he wrote and directed plays for many
of the GREATS of those days ... Mrs. Leslie Carter, Wilton Lackaye, Fritz
Leiber, Alla Nazimova, Jack Barrymore, Douglas Fairbanks, Sr., E.H.
Southern, Julia Marlowe, Helen Morgan, etc, etc. He directed Charles M.
Frohman, Belasco, Henry W. Savage, Lee Shubert, Abe Erlanger, George
M. Cohan, etc, etc.. In the 5 years between 1925 and 1930 he wrote, personally
directed, and produced twelve plays: "THE WHITE ROSE," "THUMBS DOWN,"
"TWO STRANGERS FROM NOWHERE," "MISMATES," "THE FASCINATING
DEVIL," "THE LITTLE SPITFIRE," "JIMMY'S WOMEN," "THE GREAT POWER,"
"INDISCRETION," "NANCY'S PRIVATE AFFAIR," "SMART WOMAN," and
"PETER FLIES HIGH."
During his early years; Mr. Fagan was also "Dramatic Editor" for "The
Associated Newspapers," including the "New York Globe" and various Hearst
newspapers. But in 1916 he took a "SABBATICAL" from the Theater and served as
"Director of Public Relations" for Charles Evens Hughes; the Republican
Candidate for the Presidency - he refused a similar post offered him for the Hoover
campaign in 1928; thus, Mr. Fagan's career encompassed the Theater, Journalism
and National Politics, and he is a proven expert in all those fields.
In 1930; Mr. Fagan came to Hollywood where he served as "Writer Director" with
"Pathe Pictures, Inc.," then owned by Joseph P. Kennedy, father of the late
President Jack Kennedy, and also at 20th Century Fox, and other Hollywood
Film Studios. But he also continued in the Broadway Legitimate field.
In 1945, at the urgent request of John T. Flynn, the famous author of "THE
ROOSEVELT MYTH," "WHILE WE SLEPT," "THE TRUE STORY OF PEARL
HARBOR," etc.; Mr. Fagan attended a meeting in Washington D.C. where he was
shown a set of Micro Films and Recordings of the SECRET meetings at Yalta
attended only by Franklin Roosevelt, Alger Hess, Harry Hopkins, Stalin,
Molotov, and Vishinsky when they hatched the plot to deliver the Balkans,
Eastern Europe and Berlin to Stalin. As a result of that meeting; Mr. Fagan wrote
two plays: "RED RAINBOW" ( in which he revealed that entire plot ) and "THIEVES
PARADISE" ( in which he revealed how those men plotted to create the "UNITED
NATIONS" to be the "housing" for a so-called Communist One World Government ) .
At the same time; Mr. Fagan launched a "ONE-MAN" crusade to unmask the Red
Conspiracy in Hollywood to produce Films that would aid that "ONE WORLD
GOVERNMENT" plot. Out of that came into being the "CINEMA EDUCATIONAL
GUILD." As a result of the work of this "C. E. G." organization ( headed by Mr.
Fagan, in 1947 ) ; came the Congressional Hearings at which more than 300 of
Hollywood's, ( also Radio and T.V. ) most famous Stars, Writers, and Directors were
unmasked as the chief activist of the Red Conspiracy. That was when the infamous
"HOLLYWOOD TEN" were sent to prison.
The events depicted in his article did occur and are fact. If there are any that you know to be false, please point them out to me. I have lived a good life and for me to say I have not benefited from the economy would be a lie. I have also been consternated on many occasions by conditions of inflation, recession, depression, wars, media manipulation and propaganda and foremost, currency debasements and the macro causes thereof.
Do you really believe the Rothschild Dynasty regards gold as a hasbeen? This current war on gold is being waged for a reason. For someone to accumulate cheaply. There are many clever well written articles on the uselessness of gold that sound so logical that it is hard for one to debunk them; namely Martin Armstrong for one. I know that fiat money is valueless save the conditioning put upon us to the contrary by the powers that be. Gold in the end ( Only God knows when? ) will eventually win out. Always has and always will. The only thing that bothers me this time is who or what will own the majority and how they will use this power.
OK...I'll try the day crowd...a SERIOUS QUESTION that deserves serious thought...
When the bubble bursts...Where do the "powers that be" plan to park their wealth??? They must have a plan. The really big boys do NOT go bust in man-made disasters...they get bigger. Anyone?... Everyone? ( this may or may not include gold... )
squirrel, Namaste' and a massive gulp to ya from the Island that is Long...
I believe the word is parenthetically , God will not save you, empiric fundamentals belie requisite sense which is common without handkerchiefsnow what you have to ask yourself is did reason exist before man, or did he invent itget to the root of this without Einstein, a dentist or a gardener and you will be well on your way
anyone wanna bet that, *if* Mr. Buffett makes any announcement soon on his silver holdings, it's not gonna say that he's already sold it or has already made plans to....?
I'll put up one one ounce silver coin on this if anyone's interested...
Why are the current projections valid when the previous were so totally wrong?.
"Short Position changed to long position on Feb. 24, 1998" - Closed at 6026.29
Target is 8600 to 8800 last two weeks of July, 1998
Return = -1.7% annualized -3%
June 30 = 6078.51
Long Projection Closed 12:00 est July 2 @ 5925.34"
The Sunshine Soldiers in the Gold War are always hanging around the camps and battlefields looking to scavenge a "return" from the misfortune of others. They rail against tyranny and government "policy", but place the fruit of their labor into the fiat scrip, financing the deception and enslavement of other nations and of the next generation. They stuff the purse they hires the hands that employ the guns to compel them and the chains to hold them. They are cheap, trinket-like imitations of men. They are puppets whose strings are pulled by the friends of government. Their divinity is the same "god of the return" worshipped on Wall Street and in Congress. They endlessly relate their pitiful little discouraging stories about the losses suffered by gold holders for twenty years and how "useless gold" has "no return" unlike emu egg, pet rock inventories, and boogie woogie stock.
Oh, ye feigning friends of liberty, your perfidy well befits you.
What is needed is more Swiss fortitude for freedom and fewer squirrels, rats, and other rodents and their rodent values, rodent tails, and rodent spines. But fortitude for freedom is a treasure that neither gold nor "return" in any quantity can purchase.
You may be wasting your time. I usually ask that question once a month or so. It never gets a decent answer.......uh uh. Oh well.
away...to the lake for a little skiing and funnin'
ohmy
And may we meet someday when we've sold off our holdings in the middle of a PM mania... somewhere in a 5 star resort on a tropical island, sipping good tequila...
mozel, a most special gulp to ya from the Island that is Long...your lantern of thought
is truly valued... and now...Deleterious are the thoughts of the man who knows not how to hurdle the ALPS without oxygen ehin response to your previous post...one more gulp at ya kid.......................
As I suspeted my comments on Gold were critized. Gold going much, much lower does not make much sense but then not much does. We will have a bull market at some point but new lows will happen first.
When Armstrong made the statement about gold going to $200 people here laughed but surfing the net I am finding some other traders whom I respect also projecting a large and final wash-out before the bull market starts.
And I SHALL most certainly drink to that...one sip at a time of course...
and to you a toast...May you live forever amd the last voice you hear be that of a Loved one...cheers...
Ravenfire *****we may have to wait until 16 september
Ravenfire,
Checking out berkshirehathaaway.com and Warren is having a special
shareholders meeting in September ( general re ) . Maybe he
will suprise us all and announce that he purchased more of those
teardrops from the moon.
If the gold bottom were in I'm sure some the sr producers like Barrick
would have been announcing aquistions already. It appears they
are not so sure themselve or there would have been some major
announcements by now
Who are the "Powers that be"? Your question is somewhat vague.
During a crisis, governments institute martial law, and at the very least rationing. If even a hurricane hits, we get warnings against price gouging on ply-wood, batteries and other necessaries, so the governmental "powers that be" will be at the head of the line on "stuff".
The super rich have multiple bank accounts, houses, etc. in various countries and can move money between currencies, commodities, real estate, stocks and bonds. Bill Gates is buying a South Pacific Island. Even the CEO of my company has a big yacht, a plane and a second home in Mexico. So don't worry about the rich folks, they'll do just fine too.
Not all wealth can be counted as gold or land or whatever. The underpinnings of society are natural and human resources and ORDER. Order based on a rationale commonly understood. One of the reasons the US$ is strong today.
Powers that be may become powers that don't be....Everything goes up for grabs when order breaks down... Maybe some agency premeditated the y2k situation facing us? I find it hard to belive this is an accident. Even our defense system will be down ( according to GAO report ) . After watching the Pres of GM on television I find it hard to belive he could premeditate anything, or the rest of the corporate bosses, Clinton?
My guess is you better dig deep and form whatever hypothses might come your way.
Clinton probably praying for a nuclear exchange between India
and Pakistan before the 17th otherwise he will appear on TV
with Chelsea and Hillary crying in the background explaining
to the American people why he had to treat monica like the pig
she wanted to be.
For Glemm
I agree with you completely on the sp500 .. also
on Homestake ..which I think is the real Achilles
heel of the gold sector .. I cant see it going up
much under any circumstances .. I think it is a really
safe short..
However, I see some glimmer of life in gold .. I
think silver may be the better short .. For sake of
argument I can see it at 4.75 with the au/ag ratio
back up to about 60.
Im sure the professionals will scoff .. but Id
put the money that way.
BUFFORD, Namaste' and a gulp to ya...for my personal edification, please define
your last post, as in, what is a bad blow job...just curious, but not like George cause I don't do monkeys with yellow hats, even I have standards, not like musical parchment or nothin....
What did you expect on a lazy Sunday afternoon? : ) We can't all be as erudite as Mozel.
The big guys have diverse investments all over the globe. When Soros is not out attacking currencies and felling governments, he is buying silver mines in South America. Buffett doesn't like to get his hands dirty so he just buys 111 million ounces of the finished product. Buffett just sold a couple of tons of bonds. The point is this, the "powers that be" are hedged, diversified and constantly moving. They have the best information that money can buy and we don't know what they are doing until after it is done, if then. I think Buffett's silver purchases were smoked out by a lawsuit, way before he was ready, but that's a rare instance. Von Finck is still buying Homestake, so I have named three of the "powers that be" who are heavily into pms. As you would say hmmmmmmmmmm.
Sorry - gotta take a swipe at this. Armstrong gets under my skin not so much because our views differ, but rather because he cloaks inane and vacuous arguments with this misplaced professional pomposity. The "Economic Confidence Model says..." blah blah blah - why the need to ordain the model with capital letters? Does it make it work better? Anyway, now that my biases are out in the open, let's look at his Aug 7 blurb in terms of a couple points.
The piece starts off with a graph showing the price of various commodities and currencies plotted against the dollar. Gold and silver behave dismally. But look: what is the baseline of this comparison? 1980! A period of runaway inflation; a period in which banks threw hundreds of millions of dollars into an attempt to corner the silver market. For the baseline, Armstrong chooses an extreme price strike. This use of a "convenient statistical bracket" is not only misleading but intellectually dishonest. Just about any other baseline in the 20th century would have shown better returns for the precious metals and Armstrong _knows_ this. The truth of the matter is that the average investment in gold/silver this century has shown returns comperable to other investments. It begs the question: does the author make his views match his numbers or his numbers match his views? And for someone who purports to be so scientific in his methods....
A strong contention is made that only a rising dollar will help gold; that it has been a weak dollar that has suppressed the gold price. "In reality, a commodity rally can ONLY materialize if we see a dollar rally - not a decline." Oh? Why can't we see the gold/dollar and the gold/yen both going up while the dollar/yen spread goes down? Sure, a rising $US price of gold coupled with a strong dollar would be very bullish, but it is not the only bullish scenerio. The reason given seems to be that cheap yen commodity prices contributed to the current deflationary scenerio; this may be a fact, but it is not the only fact. The USD is grossly overvalued on both a trade basis and a credit expansion basis ( M3 = 10%+ !! ) If it goes down more quickly than other currencies, well, so what?
Armstrong sees a continued strong dollar and a continued strong bond market. Why? Because, well, America is one swell place to be. No commies, no pinkos. Great place to do business "Virtually every major multinational manufacturer set up shop inside the US" he says, "Where not one foreign auto manufacturer could be found inside the US before 1980, the post-1980 period witnessed a move to where even Japanese companies like Toyota began actually exporting parts back to Japan from the US." Come on! America's trade deficit has persisted just about unabated from Reagan on. Manufacturing has by and large moved offshore and now, with a 145 yen, we're seeing cargo ships dump their products and skadaddle back to Asia for another load _empty_. America's strength is not so much its increased productive capacity but rather its incredible ability to consume. It has become the world's glutton and it got there on credit. The yen at 200 would induce this sick puppy to gorge himself to the point of hospitalization. Stomach pumping material.
A continued strong $US and bond market may well remain in the cards for sometime, however, but not for the reasons Armstrong gives. America is sick, but it's currency is deemed to be a safe haven. The trend du jour has been the flight to quality. The current stop is the dollar, yes, but what will happen when the printing presses heat up to keep the party going? What is the next stop on the flight-to-quality tour? Yup - it'd be gold.
Could go on, but I think I'd rather plunk myself beside my buddy's swimming pool than continue to think about Mr. Armstrong.
Unless WJC"s smallywood connections can create a divergence
of attention between now and the 17th he will be saying that he did
it but didn't like it and 2 crying husseys in the background will make
it even more real
They concentated on Jefferson's relations with Sally Hemmings, his concubine, and the spin was how he wanted her to stay till his death. It looks like the spin around Clinton goes a long way!!
Glenn: As you know I too expect a final wahout, but nothing like $200. RJ who probably has the best forecasting record here does not anticipate such a drop either. And Hepcat is talking about $325 by Novemeber.
$200 gold implies a world wide depression. And that simply is not going to happen if the powers that be can do anything to stop it. The latest BUSINESS WEEK" -- a mouthpiece of the Fortune 500 -- talks about the need for aggressive reflation to save the Asian middle class. That is right -- key sectors of the establishment are pushing for REFLATION and grealy increased liquidity
That is not a scenario for $200 gold. Maybe $270 followed by a powerful bull.
"Powers That Be": The folks who control the wealth of this world. ( And not necessarily the politicians ) . Where will they park their money during upcoming crisis? If their wealth is in the stock market...where do they move it? If their wealth is in land, and deflation hits...how do they hedge? If their wealth is in $$$... where do they go ( financially ) to escape devaluation? Historically; they always have a plan...to re-emerge even larger. What is it? That is a question that I have no answer for. If I did, I would move my small bit there now. Anyone?
There was a Kitco post a few months ago that said Armstrong was heavily short Gold in early 1985. That's when Gold started a strong move up from about $280, topping out near $500 in late 1987.
Responding to your comments at 13:05 on the POG/XAU. I like to look at the 233 day moving averages for guidance. Gold has been below the 233 since January and is now 4.5% below. Silver has been been bouncing above and below in recent days after dropping down from 52% above its 233 day during the Buffett run-up. The XAU and XAU/AU are 20% and 16% below their 233's, near record low territory. If silver and gold climb above their 233's for any length of time I would expect the XAU to follow very easily and forcefully from these traditionally cheap levels. The danger with the gold stocks is selecting companies with healthy balance sheets and blank hedgebooks. Not many meet the test with the gold price this low. It is similar to the late 20's. At that time there was a lot of residual inflation from World War I. Governments, not wanting to admit to inflation, kep the POG fixed at the pre-war rate of $20.67 Mines closed as their costs were not covered at that price. Politics closed the mines until the POG was revalued in 1933. We are in the same boat now. Governments do not want to admit to the inflation of the Cold War years. They are still keeping the price artifically low by leasing and by outright sales. Politics will keep closing mines until the price is revalued. You have to make sure the mines you own can make it through to the next revaluation; not an easy task for any investor.
Thought I'd give it a shot--In the event of a crash or severe bear market, enough of those trillions of electronic dollars would flow into Gold, Silver and Platinum to create a ripsnorter of a bull market!
Bill Buckler now saying a Chinese devaluation probably going to happen quite soon. This probably will be the catalyst for the final washout in gold and commodities and the final surge in the dollar and bonds. A once in a lifetime buying opportunity for the yellow, commodites, and Asian stocks?
If you knew the answer to my "weak" question, you could be a multi- zillionaire within 3 years. ( I'll try to ask smarter questions in the future...like, "what's a good garnish for Popov Vodka?"..if there is one )
The powwers that be around here are heavily invested in the power that is.
They thrive on DEVELOPMENT and exploitation of natural resources, they need action. Bigger powers supply them with the tools to do their thing, but it's all the same cloth.
Without order none of it means a thing, examine history for a model, powwer does change hands.
Savage; You have already decieded the "powers that be " will be winners no matter what?
The Red Onion road trip was a blast. Had about 50 people in the joint listening to some Blues and a few Golden oldies ( don't delete the "en": ) . Had Honey Brown and a local summer ale on tap. Showed my Mountie around too!
I use the 233 because it gives good results, better than a 200. For example, the last run-up in gold broke through the 200 for a day or two sucking in many. During the same run-up it did not break the 233, there was no false signal. The 233 is not perfect; it can give a false signal. It seems to have special value because it is a Fibonacci number. I do not follow Echo Bay. Sorry. Because of the problems I mentioned earlier I prefer physical gold and am mostly in Central Fund of Canada, CEF.
@ok....if that don work we skin the cat this way...
clik on this site and go to missin thirteenth amendment, a lil ways down page and clik there BOY WHAT A READ!!!....sorry about that, but they just don want to give it up sometimes....hee hee
http://www.harbornet.com/rights/states.html
very enlightening.."Owners of any asset class that rise substantially in value during the deflationary collapse, will gain and wield tremendous economic and political power. This begs the question. In the event a powerful interest group sought to control the world economy, would they not create a situation, whereby all assets collapse in value - except for a particular asset class that they alone own or control? Should ALL assets collapse in value, there would be no major economic advantage to this powerful interest group. Therefore, it logically follows that one particular asset class must rise substantially in value for this interest group to obtain control of the world economy."
THE WORST@Kaplan has the worst PM forecasting record that I have seen
since POG was 400. Old Gold is a close second. When I first joined the Navy in 1960, the old Chiefs used a derisory abbreviation to express their disgust at one of the hands who was particularly inept. They would say "he has no CDF". After I overheard 1 of the old chiefs mention to another chief that Smith had no CDF, I asked 1 of the seamen what it meant. He replied "it means he has no common dog fu*ing sense."
Kaplan & Old Gold doubtlessly have high IQs, but I think they are lacking in CDF. Kaplan has been relying on the commercials since POG was 400 & has been wrong ever since. It's quite obvious that the small specs have been right & the commercials have been wrong. Old Gold has been talking about the final washout at 380, 360, 340 & all the way down. It did'nt take a genius to recognize well over a year ago that AU had many negatives going against it:
1 ) CBs threatened & actual sales + an incredible amount of producer fwd selling.
2 ) No inflation.
3 ) POG tied almost umbilically to the collapsing JY.
4 ) Most importantly-the collapse of SEAsia, which was providing the strongest incremental demand. And now of course, China is imploding along with Japan & demand in the sub-continent has virtually collapsed.
None of these negatives just sneaked up unannounced. They were all telegraphed well in advance.
I stated in Jan. that the POG would be stuck in a range from 280-320 this year. I now think that we may get a tradable rally when it bounces off 278, but doubt if we will even get back to 300 because of Australian & S. African producer selling over 295. And yes, I think that Glenn, Armstrong, Ole49r & all the doomsayers may be right & POG could get to below 250 & possibly even 200 in a severe deflation.
OLD GOLD - What happened to Lead can happen to Gold
Lead was removed from gasoline thus...
When Gold is removed from money...
when? - it is already gone for most common folks -
nobody sees it in circulation any more
( except rich folk who trade kilobars like Hershey bars )
The electronic smart card revolution will finish it off!
Its value will sink to below $200 per ounce - and lower.
Then maybe I can get some Gold fillings in my teeth!
In the face of Gold sinking and sinking - like the Titanic
Any bearer of grizzly news will be packed in ice and tossed overboard.
What is to prevent SOME electronic currency standard from
continuing on and on like the Energizer Bunny?
Everlasting faith in Gold has recently cost folks a lot of dough.
I agree that over the millenia in might remain a standard.
But then U235 pellets could become a standard too.
Or maybe Palladium - when home cold fusion furnaces become common.
Charles Allmon has been a bear longer than all of us. When his closed end fund reaches a certain level he buys the shares himself on the open market. He is a great guy. And a survivor.
I used to think we were headed for a deflation, but I have to agree with Milton Friedman, that a deflation can always be reversed by inflating the money supply. The results can be quite nasty, but less so for debtors than for creditors. If you look at who stands to lose the most from a rise in the purchasing power of money, it is those who would paying back large amounts of debt with more expensive dollars. That would include Uncle Sam as well as a host of investment firms whose principals are quite cozy with the elected pols. It also helps to have RR on the debtor's side. We suffer a political/economic malaise similar to the Japanese. The pols don't want to toast their friends. If you look at our money supply rate of increase, the fix is in.
Well $200 POG may be a tough one but a new low for this move seems easily possible.
one last time. Go Here. Under "Select daily charts" Bring up Dec Gold and Print the chart. Then very carefully draw a line under the Jan and June lows. We peirced the line last monday on a huge increase in open interst. Then as Gold always does it came back above the line and is now going down for real. We closed below this line on Friday. It kind of looks like a huge head-and-shoulders top??? Or am I short and dreaming???
If it is a head & shoulders top it projects down to the low $270's.
We closed on Friday @ $290.5
Analysts with the Argus Research group contend that any massive sell--- off from the Far East could be fended off by European purchases. Other analysts contend that the weakening Japanese Yen would divert most Japanese funds into US Treasury securities as a flight to quality out of the Far East intensifies. The US Treasury department released a report on May 6 ,98 identifying a number of changes in the total amount of bills, notes and bonds held by some top holding foreign countries. The report indicated that Japan's holding slipped to $ 296.9 Billion at the end of Feb from $300.7B at the end of Dec 1997. At the same time , holding by the U.K. jumped to $304.9 B from $286.9B. The Japan--Hong Kong--China --Taiwan--Singapore group accounts for $479.6 B or 37.5% of all foreign holders of US Treasuries. If any of the individual Asian countries were to start selling, there wouldn't be any reason for concern. But if the region acted in concert, then it could become worrisome. What is the likelihood that the region will sell Treasuries ? Considering the safety of the instruments and the need for protected money, NOT GREAT. However, there is a share of market pundits that believe some Far Eastern countries--chiefly Japan --would begin to unload in the event that the dollar rallied too much against their respective currencies. The European are looking for a safe haven hedge in the event that the Euro lasts as long as a Larry King marriage.
grizz and james: Where do you get your information? I suggest you change fast to something more factual! FYI:
1. CB sales have not materially changed over the past several years;
2. In recent weeks there has been a correlation between the POG and the dollar/yen, however there is no long-term special relationship between the two;
3. "The SE Asia collapse was predictable well in advance" - I don't think so ( even now the general belief is the impact will not be that bad ) ; and
4. Low inflation - we are living on borrowed time on this one ( if this is a monetary phenomenon ) .
IMHO, the reason ( and only reason ) for the decline in the POG over the past year or two has been the escalation in gold leases ( dreamed up by Wall Street and played to destruction by the CBs and producers ) . This was supposed to be a no risk way for CBs to earn a current yield on their gold. However, since demand exceeds new supply, there is no way for these leases to be honored if CBs ever stop an ever increasing level of new gold leases. There will be a judgment day on this one!
Anyone with a chart and a ruler can draw a line and predict $200 gold and $3 silver. In the case of commodities, these technical analysts should be required to draw a line across the chart that represents the cost of production. When the price of the commodity goes below that line, it should be a warning that the "trend might NOT be your friend." An estimated 60% of all gold mines are not profitable at $300. At $200, virtually none would be ( I don't buy any of these low-ball projections - they rarely materialize ) . When all the forward sales run out, most mines will close. Do you really think the CBs will supply all of the current demand for gold?
You are correct that Kaplan's predictions have not come true - yet. As mentioned above, the POG has been blindsided by the irrational ( if not criminal ) use of gold leases by the CBs and more recently the Asian contagion. However, the factual and fundamental information provided by Kaplan is invaluable and well worth your attention. In the case of the POG, the fundamentals are extremely bullish, and you might be well advised to tred lightly if you are playing the short side of the market. Stay nimble, and don't complain if you get wiped out in the span of a week!
It is refreshing to hear the conventional wisdom challenged at Kitco. Your calls at Kitco over the last year or so have been among the most accurate. Keeps the true believers of Gold, such as moi, from getting complacent: ) . My view is that Gold will benefit from electronic dollars seeking tangible things. Could Gold get to $200 before $30,000? I would not completely rule it out!
If deflation can always be reversed by inflating the money supply why is Japan in deflation? You can only do that once. Ask Argentina, Brazil, Bolivia, Russia, et al. Who will buy their bonds? Who takes them seriously as a world power? Who will accept their currency for goods? It is not that easy. Look at the U.K. They were a world power until they devalued ( inflated ) in 1931. Downhill from there, at least as the leader of the then free world. Japan is dragging their feet on calls for yen inflation for exactly that reason. They do not want to be a third world power; nor does China.
The problem is more than just inflation. The world runs the risk of returning to the Dark Ages if all the currencies collapse. The fall of Rome was essentially a currency collapse. The very concept of the division of labor requires, repeat: requires, at least one sound currency freely circulating in the world. There are no other options. Things can go downhill rather quickly. A worldwide currency collapse will be more deadly than nuclear warfare. I don't think many people understand how serious this currency crisis has become. See my earlier post about Indonesia.
Have to agree with you on Armstrong. Turn the Dollar Index upside down and put it under the CRB chart. Enough said. A strong dollar has its advantages, but higher commodity prices is not one of them.
Inflation & deflation as MF uses the term refer to the money supply. Increasing the money supply as you say will not do any thing to encourage productive investment. The coming recession/depression will be about liquidating too much debt & existing over capaciyt tthat is currently setting this wave of deflation we are temporarily experiencing as lower prices, increasing competition & squeezing profit margins. You are dead right that Inflation is already structurally baked into the Cake with 10% + M3 growth & cronic humongus budget surpluses that continue to the present day. This inchoate kinetic inflation is hidden for the moment & in the S&P & the Bond market held by foreigners & especially in the 70% of all USDs in circulation now held off shore waing to come sreaming home when either the S&P or the USD turns sour just shortly.
However, the notion that monetary matters can be constructively managed in this environment merely by inflating is a silly notion. remember that in a deflationary setting lowering rates is like pushing on a rotton squishy noodle. Pumping bank free reserves & pouring money out of even bigger deficits only crowds out private investment shooting rates up & most crucially, when the USG is spending the money on pork,the market dislocations only become more severe as in Roosevelt's "Raw Deal" !
If the politicians refuse to let the Market relieve itself the misery will only be drawn out & worse. Ofcourse the Democrats will post a populist demi god like their House Leader Gephart & it will be a close question if the American people will choose the 39s again.
Good luck, God speed & May God Bless us everyone !
Donald: The problem with Japan is it hasn't inflated its money
supply. The Bank of Japan has been rapidly expanding its balance
sheet but this has had little effect on the Japanese money supply
because the commercial banks aren't lending.
However, if the Japanese resorted directly to the printing press, the
money supply would expand and the deflation by definition would stop.
However, this would not stop the depression in real economic activity
and would probably worsen the situation
Rome is an interesting example of collapse through inflationary
depression. The emperors resorted to the expedient of debasing the
coinage which unleashed price inflation. However, the empire's
economy went into a prolonged contraction in real economic activity.
DONALD: You had an excellent posting at 18:42. Deflation
has the upper hand. You're statement about heading into the
Dark Ages may not be so far from what's about to happen.
All of the currencies and bonds of the world -- which have
been expanding for nearly a century -- are about to become
worthless. This eventually happens after all credit expansions.
As my book indicates -- it will be a Total Collapse.
Violent DEFLATION lies directly ahead. The only safety, and
the only liquidity lies in gold and silver coins.
What is the Avid consensus & counter consensus on the S&P crack up? Crash in mid- September or late October ?
I remember Oleman's flat out statement 8 months back that we'd be in absolute depression by July.
What is latest timing call ?
repeat requires at least one sound currency freely circulating the world.
yes and On Friday I asked the following question :if the EURO is to have 10% Gold reserve ( not backing ) what will be the other 90% US$ ,Yen or guess or is this a dumb question ? help
go gold
cpo_UK
ANALYSIS: Phase 1 of the on-going stock market crash ended
on August 4th -- with a decline in the DJIA of 8.7%. The
early indications are that the coming crash will be worse
than anything the world has ever witnessed. The reason:
The Phase 1 decline surpassed, by far, the early declines
of 1929, 1987, Tokyo 1990, and Hong Kong 1997. The Phase
1 declines in those earlier crashes were only 3.9%, 6.5%,
3.1%, and 7.2%.
The Phase 2 counter-trend-rally probably ended on Friday,
August 7, at DJIA 8598. Look for the Phase 3 decline to
last for 1 to 2 weeks, and carry the DJIA down to 7800 to
6800 -- before the end of August.
Bank'sin Japan ai'nt lending because credit worthy barrowers ai'nt got no credit wortthy productive investments to make, except the AU/$/Yen carry trade, because over capacity is the problem to begin with !
Remember that interest rates in Japan are @ less than 1% ! They arecalready at the end of their sqishey monetary rope !
Next stop raw inflation ! YI HA ! Ridum Cow bOY !
I guess we all agree that inflating out of a deflation is not a particularly pleasant prospect, just because it can be done. I certainly did not mean to imply that it will fix any problem. Indeed, it will exacerbate the current cycle of malinvestment. It creates the ultimate economic moral hazard by punishing creditors and rewarding debtors. Deflation is the bitter medicine that has to be taken to cure the disease of 70 years of inflation. What I meant was that it ain't gonna happen, for political reasons.
This brings into question the whole idea of why we have a centrally managed money supply which does not seem to do a good job of assimilating the information of the markets, while being open to political pressures and manipulation. I would much rather rely on a money supply directed by the marketplace and based on a gold standard, which assures that the money supply and the "natural rate of interest" converge at levels that encourage productive investments, while discouraging malinvestments. Unfortunately, I am in the very small, and growing smaller, minority on this issue!
The world is essentially still on the Gold Standard. If we take the time to make individual calculations and historical comparisons we find that, priced in ounces of gold, things are not that much different that 100 or 1000 years ago. The Kitco "Chicken Standard" comes to mind. Most of the developed countries allow their citizens to own gold. The problem will come at the un-knowable point when currencies, all currencies, suffer a crisis of confidence and all the citizens of the world seek to excercise their exchange option at the same time. They can not all make the exchange at the last minute. To say that many will be left out is an understatement.
Modern commerce, as we have come to know it, can not exist with the exchange of gold and silver coins amoung the few lucky ( or smart ) ones who got to the exchange window early. All will suffer, even the early birds. That is why it is best to convince all governments to see their folly now, before it is too late. I am fairly certain that there is much private intergovernmental discussion already on this subject.
ANALYSIS, CONTINUED: Phase 4 of the coming crash should
take place in late-August and early-September. It should
be another counter-trend-rally, lasting from 5 to 10 days.
That will market the final exit point for all wanting to
get out of the market. The Phase 5 ( Panic Phase ) will
begin during the 1st few days of September, and last
throughout the month. By the end of September, the DJIA
will be below 5000, possibly as low as 3000, or even 2000.
These time-projections are based on the patterns from the
1929 crash, 1980 Precious Metals crash, and the crashes
in 1987, 1990 Tokyo, and 1997 Hong-Kong -- which were all
remarkably similar.
The biggest difference, now, is that the DJIA is falling
much faster than the earlier crashes -- suggesting this
one will be the most ferocious af all of the crashes.
It is good to see you are still out there. I have not seen you post much recently. Back in November, I posted that I thought it might take 2 years for a gold bull to take off. You thought it would be much sooner. It has been 9 months, and I still think things look good for 1999, but this year may be a lost cause. What are your thoughts?
I agree and it is very nice to see a challenge to the 200$ level the continuous chipping away at "bottoms" must encourage shorts........
I would query point 3 ) 31 march 1996 the Privateer thought there would be a problem However I do agree there are those who think the impact will not be that bad ( which is a bit like the 401k mutuals "hoping things will get better because they do not want to believe otherwise ) not me though.
As you say Kaplan is invaluable with a vast amount of information on which he based an opinion ,but then the gold market is Rigged/manipulated No? ( for the moment anyway ) we are really for a combination of drop is US$ and real fear ( increase in au lease rates ) but the Schmucks have probably quite a few computer models on which the PPT play games.
Lets all try to imagine WB has bought tons of gold imagine what that would do
Sittin an sippin, awatchin the mists on the mountain after a needed rain; I humbly ask if it is possible to read another ( or old ) Blue Dress pome? Gonna be a nice nite and would point things in the right direction IMHO!
SILVERFOX; As usual, another great post. I always enjoy readin' em.
I agree with you and others ( like Spud Masters' recent post ) that
inflation is more of a concern. Yes, some prices have been falling,
like energy and the often quoted CPI basket of goods, but other
prices have been rising! And like Spud Master says, they are disguising
inflation by repackaging. To me, all things point to inflation ( or maybe
stagflation ) ahead.
Look out above! PM's may dip a little more, but soon, very soon, they'll
be sky-rocketing!!
P.S. Also saw a news blip ( cnnfn? ) that airlines raising prices.
P.S.S. Too much money chasing too few goods results in an inflated price
right? Our stock market fits that puppy!
Fox-Man
Please give your opinion on owning bear market mutual funds. I just bought into Prudent Bear and was thinking about buying more. Your analysis of the stock market makes a lot of sense to me, much more than all those "invest for the long term" idiots on TV. Do you think a mutual fund that sells short can make significant profits over the next few months?
What about the PPT ( Plunge Protection Team ) ? My guess is that government intervention ( buying futures or even stocks ) will try and prevent a crash landing. The parallels to 1929 may be clear but I doubt that in 29 there was massive market manipulation that appears to exist today. My bet is for a some sharp down days and a slower decline.
Head and shoulders tops occur at tops, not after lengthy down trends. the pattern is there, but not to be interpreted as a top ( IMHO ) . PATIENCE is the watchword. This will soon be resolved!
Best Regards; Mtn Bear
Thought I'd offer a THOUGHT on August 17, 1998. There is to be a "consciousness raising" on Y2K somewheres around this date, by some Y2K Big Shots, on account of there being 500 days left until Y2K on this day. How nice. Don't get me wrong, I am all for consciousness raising. Clinton gets to tell the truth on this day as well. As for eclipses, maybe we'll see some stocks and government officials get eclipsed then, eh!
Excellent Post!!! Couldn't agree with you more. It is only a mater of time befor gold rises, Kaplan's predictions are right on, If your read Barons a few weeks ago, they used the same logic as Kaplan and commodities.
Ray
I'm sure most of you have probably already seen this-
10 Aug 98
Barron's Market Week
Homestake Mining
German investor August von Finck purchased 3,865,100 shares from July 16 to 31 at $10.32-$11.21 each, increasing his holdings to 26,889,400 shares ( 12.7% )
I am sure that your observations are correct. When I run into something like that sort of "secret" price increase I boycott the product for another vendor who has not followed that business practice. I am sure many others do the same. Not too long ago the airlines tried a price increase and had to back down. People find another way and teach these guys a lesson. No question; some are getting away with it though. Look how many mutual funds had to go no-load in order to compete. Seems as thugh I heard about some earnings problems at the fast food restaurants. I suppose cooking at home is an option many might be taking. There are lots of ways to fight back.
Inflation/deflation: Are we ignoring the monetary effect of a severe stock market contraction? It would seem to me that that signal event would implode a great deal of debt and in the process contract the money supply equally. Thus, leading to an exacerbation of deflationary forces.
The immorality of the present system is, no doubt skewed toward debtors. It always has been. It also follows that great effort will be spent to place debtors in the best possible position but outside forces, ie the US stock market, may intervene in a dramatic fashion. If the pretense of paper wealth is suddenly reduced by some several trillion dollars a lot of debt will be called in short order.
I think Davidson et al put the question as: "When do the benefits of printing money exceed the costs?" I guess I would add a second question: "Do the pols care about the risks of printing money?" As soon as a determined inflationary stance by the Fed became obvious to the bond markets, interest rates would sky-rocket, obliterating the supposed benefits of the maneuver. Yet our money supply is increasing at an annual rate of 10%
What gives? Maybe I'm too cynical, but one political aspect of the issue just might be that it is easier to find scapegoats for inflation than it is for deflation. For one thing, many folks ( including the pols ) do not understand deflation. For another, you can always point the finger at someone else for raising prices, whether it be oil companies, lenders, retail sellers, etc..
@Donald & "[t]hat is why is is best to convince governments to see their folly"
Donald,
"See their folly"?! Are you kidding? The money-debasement we are witnessing is done by the goverment with wide-open eyes: it's how they control us, to our unending shame.
All governments are nothing but nicely dressed Mafias who do their extortion with words. Our forefathers wisely locked numerous chains around our own in an effort to restain it.
They failed, as began with the usurper of American freedows Franklin Roosevelt, and as is ending with the open, unashamed venal corruption of Bill Clinton.
History will record that the grandest deception of this century was the massive inflation of the stock market:
Here is the promised land of Retirement, ye Baby-boomers! Pour your wealth into the market -- heedless that the runnup is based not on producutivity, but meerly money chasing paper stocks.
Do you *really* think any of the boomers will get out of the market with any of their wealth??
Oh yea, they may have made $4 million dollars, but the only way they'll be able to spend it is on $100 a loaf bread, $25 hamburgers and $10,000 doctor office visits.
ANY money not based on an unforgable commodity such as gold or silver is criminal and will be exploited to the detriment of those who place their hope in it. Gold must be crushed at EVER opportunity to continue allowing those in the Fed & other central banks to live the elite life while the rest of us have "faith" in thee afterlife of the Stock Market retirment.
Spud, laughing at the corrupt money changers of the Federal Reserve
I have been a deflation bug for the last several years. All I could see was ever lower commodity prices and ever lower prices for imported goods. This last week has changed my mind. I own an operate a commercial printing business. For the last five years now I have given regular pay increases to my employees and tried to offset the added costs with more productivity in the form of better equipment operating at higher speeds, etc, etc, etc. This last week push came to shove and we made a decision to raise prices even if it means losing market share. The point has been reached where we feel it is better to do less and make a profit and stay alive than continue to do more and make less and go out of business. I wonder how many other companies across american reached the same conclusion last week? The other thing that happened this last week was my wife and I went and looked at some potential homes and homesites for retirement. I was astounded. Property we looked at a few years ago has gone up 100% in price. The government says inflation is dead. I say B.S. They haven't looked at property values lately. Half acre "marsh view" lots are selling for $100,000. Years ago we called "marsh views" swamps. In any event inflation is alive and well in the US. It's just that the government isn't measuring it any more.
Talked to my grandfather over dinner this evening. Discussion went to the war ( WWII ) and his tour of duty there through France, Germany and Austria ( at my urging, he's never talked to me about it before and I was curious ) . Anyway, that was all really interesting to say the least, but I also found some other comments interesting, things that were happening in America when he got back.
He said that there were coupons for purchasing gas. No coupon, no gasoline. You paid 0.50$US for a coupon for a ration of 5 gallons of gasoline and you took that and paid further for the gasoline itself. He said there was a guy in Virginia who sold gasoline on the black market that he apparently got from some sort of weird arrangement with farmers who were allowed to purchase more coupons, or got more for free, or something like that. Anyway, apparently this gasoline black market guy was jailed after the war effort was over, which my grandfather seems to remember with a little bit of humor. Some of the older ladies at dinner verified that you couldn't get stockings because the materials were being used to make parachutes, etc. stockings apparently commanded a pretty high premium when they were available at all. Oh, and I think gasoline was running 0.20$US, I can't remember exactly what grandfather said. He said there were rations on sugar and flour and all sorts of other things as well, but that they were still fairly plentiful and easilly had. Anyway, thought I'd pass that on for what it's worth. All that was 1944-45.
Have you ever wondered why the stock market has gone up and up these past few years and the bond market has been stuck in a trading range? I have wondered. Sources tell me that Germany in the late 1920s had a rising stock market with a bond market that seemed to stall out. I think most of you know what happened in 1922-1923. In case you dont know, I have quite a bit of their nice looking paper on my walls. Looks very nice and is as big as some stock certificates. It took alot of this paper to buy simple items at the store. I was not around then but my source was. The reason may be why bonds are stuck is maybe m-3 growth. Maybe people dont trust that paper all that much ( accept the U.k. and Japan and a few others ) . Yes, we are on a world devaluation process starting with the weaker fish. The big fish go down last. I am not sure of the final result but am sure there will be plenty of paper. ( did you notice the new twenty dollar bills ) . I use the pennies for my roses, keeps them from getting root rot in the vase. Oh yes, 180 gold I would not be surprised, but 2,000 plus seems worth the risk. Silver stocks in the comex I heard got down to 1981 lows. I guess they need all that silver for computer stuff. Dont be alarmed. You can always turn your paper dollars or german marks into gold and silver. ( as long as their is supply ) .
By the way, those 100,000 german notes seem to be everywhere, even today.
I'm stuck with gold cause I lost too much on it and I ain't changing the fund now! Go gold! Before you break me.It may be 20 years before we get our day in the sun but lets have fun getting there. It is money I can afford to lose. But I don't think I'll lose it. YES?
Sorry I have nothing to add to your conversations.Did I say the rich are getting richer?
About two years ago, I took the Motorcycle Safety Foundation
beginner's course. ( I know that you ride a bicycle, is the
reason that I can mention such a subject. ) During the course
of the riding school, the instructor and I became very friendly.
In one of our conversations, the instructor mentioned that his
oldest student was 82. Naturally, I asked, "Did he pass?"
The instructor responded, "Yes". Donald, when you're 82, maybe
I can agree with you.
Got two Grandparents, Dad's side, who are in good heath and live at home. Grandpa will be 100 this November. Grandma will only be 99 this December. Grandpa thinks it is a good idea to have Gold. Has a few Gold coins himself. Grandma says the Mountie is pretty, but it is not round.
Bill2j; Thanks for the example. I've heard of other similar situations. Alot of
prices are falling in many well known commodities. But at the same
time, prices are rising in others sectors ( ie; services, homes, equities,
labor costs, etc ) . It's just a matter of time,IMO, before these rising
costs are reflected "across the board". What will escalate this scenerio
is the fall of the U.s. dollar. I think everyone hear believes the dollar is overvalued and is due for a fall...
Soon, very soon, the PM's as well as other commodities, will be reversing
to the up side. IMHO
Fox-Man
A year ago May Armstrong stated gold would bottom in June 1998 and begin a HUGE bull. Go look at his speech in the May 1997 gold conference in Vancouver. Was he right then or is he right now? Inquiring minds want to know!
Y2K is STUPIDITY, not conspiracy. It's as simple to understand as a sensible ( at the time ) programming convention that saved very expensive memory surviving and propagating itself through shortsightedness to the point that it presents a fundamental threat to the continued operation and perhaps even existence of modern society. Like the cartoon character Savoir Faire, it's everywhere. The amount of resources to fix it, especially time, and the consequences for not doing so were almost universally underestimated by corporate and governmental managers around the globe. This is not to say some groups or organizations might not view this as a once in a lifetime opportunity to further their own nefarious interests but they didn't cause it. The inability to see beyond next quarter's profits and the desire not to be seen as foolish or as one who "rocks the boat" caused the crisis.
$200 gold and $3 silver? It'd be like they're just GIVING it away. And on the eve of the digital fiat currencies worst nightmare, Y2K. Maybe the "powers that be" aren't so bright after all. If this comes to pass all I can say is... Thanks, guys! Just back up the truck over here. I'll take this worthless stuff off your hands. You know I've heard rumours this junk doesn't even pay interest! Can you imagine? So why do *I* want it? Umm, er, uh, I guess I'm easily amused by bright shiny objects. Yup, I'm just another dumb loser goldbug. Here's some of that special green paper you wanted. ...Later that night... HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA DON'T YOU FOOLS KNOW YOUR PAPER WILL SOON BURN! MOST OF IT'S TRAPPED INSIDE YOUR COMPUTERS! IDIOTS! YOU INCOMPETENT BUMBLING MORONS! YOU HAD TIME TO FIX IT AND YOU DID NOTHING. HAHAHAHAHAHAHAHAHAHAHAHA. etc. etc. Then, of course, I will take over the world. All will be Fiveliter. The infidel Chevys and Imports will be destroyed in a fiery scourge! ALL HAIL THE SMALL BLOCK FORD! Oops. Gotta run. It's time for my medication. Also the Simpsons are on.
That is so awesome, can you imagine living to be 100 years old ? *grin*. I don't reckon I'd make it that long unless I quit smoking. Of course, my grandfather smoked too, hmmmmm... HeheHaa. I keep meaning to ask him about something that I'd heard from one of my other relatives, and that was that he was paid in silver for a time, but I don't have details.
Your post brought back many memories. During the war we used to go to Virginia Beach and have a blow out. The boarding house lady, Goldy, always had coupons, but we hardly ever needed them at the ABC. When I was 14, I went in and bought 3 quarts of bourbon. Another time when Satchmo, Louie Prima and Cab Callaway were coming to the Surf Club and we took the rumble seat out of an A model. Went to Washington and loaded up on liquor at about $2 per bottle. Came back to the beach and sold it all at $20 each at the door of the club. Talk about a rampage!!!
Donald - I'm glad to see someone else pointing . . .
out that the emperor has no clothes. People keep saying "deflation can't happen here, because all the Fed has to do is inflate." They don't get the fact that it is possible for deflation to escape from the control of central banks.
People seem to think that central banks have some sort of magical control over the economy, and that they can produce inflation at will. They don't understand how the Fed or other central banks increase liquidity. Inflation is not caused by the waving of a magic wand, and contrary to what some people think, it's not caused by cranking up the printing presses and churning out more currency. The Fed can churn out all the currency it wants, but it has to put it into circulation the same way it does "electronic" currency such as T-bills.
The Fed and other central banks manipulate inflation by manipulating interest rates, and they do that by opening the "discount window." But what if no banks come up to the window to borrow?
This is exactly what's happening in Japan right now. Banks have so much bad debt on their books that they have had to tighten their lending requirements. Both businesses and consumers are so afraid of what's happening to the economy, especially after the crash of the Nikkei, that they are saving more and refusing to borrow. The Bank of Japan has lowered interest rates to 0.5%- and they still can't produce any inflation.
Exactly the same thing happened in the US during the Depression. The Fed even went so far as to create "negative interest rates," but the real rates were still positive in the deflationary environment- and the banks refused to lend, and the businesses and consumers refused to borrow, especially since they were frightened by what had happened during the crash of the Dow.
How's this for a scenario. The Dow and S&P 500 crash on cue this fall, and this time the PPT can't get things under control. Deflation is arriving in North America even now, and then the stock market crash bankrupts many consumers and businesses and destroys the retirement savings of almost the entire Baby Boom generation- the suckers who put their money into mutual funds, just like the Depression generation had their money in "investment trusts."
The Boomers will suddenly realize they have only 10 years to get back their retirements- and what will they do? Well, they won't invest in mutual funds again very soon. They'll save money like crazy, and they'll buy fixed-income investments, i.e., they'll become lenders instead of borrowers! Almost nobody will be borrowing. The Fed needs a good supply of borrowers if it's going to crank up inflation- they won't be able to do it folks. It'll be Japan and the Dirty Thirties all over again.
I keep telling them to stick around at least until the turn of the century. By doing so, they will have lived in 3 different Centuries, and 2 Millennia. They both agree that is a good idea!
Sir, not in any attempt to put you down in your forecasts, but what is the basis of your prediction that we will see the major crash in September? ( we know the basis of Ure's predictions as stated on his webpage,
http://www.urbansurvival.com/ ... what's yours? )
I do recall that you were proven wrong with similar some months ago.
imho, the only thing anyone can predict about the further movement of this stock bubble is that the market will find a way to surprise everyone.
You are assuming that the Baby Boomers will have jobs during those 10 years? Maybe, but probably not where they used to work. The ones who do have jobs will snap shut their wallets and pocketbooks. Consumption spending will plunge. Families will double up. Two car families become one car or none. America becomes "Tag Sale City" etc. etc.
Yeah, thanks for verifying what I already suspected. People my mother's age are always talking about how virtuous, etc, their parents were and how they were the standard by which we should live our lives, etc, etc. Well, I've seen that little sparkle in my grandfather's eye, and I've always told my mother that I bet grandfather wasn't as tame a character when he was young as she remembers, no matter how much she and my aunts and uncles might want to believe. Sounds to me like people that age knew a lot more about having a good time than people my parents' age.
Inflation is a general rise in prices. Deflation is a general fall in prices.
Printing more money does not cause inflation. The fact that sellers will generally charge what the market will bear is what leads to inflation.
Inflation will thus either arise from a scarcity of supply or an overabundance of demand in comparison to the ease of obtaining cash.
The government can print all the money it wants, but if that money does not get into the hands of the buyers there will arise no inflation.
We have a supply overabundance due to recession in the asian and other economies. As producers cut production and go out of business the oversupply will ease. By that time however, recession has created less demand due to people out of work. So even the lessening of supply does not neccesarily raise prices.
More money in the banking system due to the printing of more money will also not nessesarily create higher prices. With no demand and no one working companies will not borrow and invest the newly printed money.
In this case the invrease in money supply simply creates lower, ever lower interest rates as the banks have an overabundunce of money but no borrowers.
As you see, without a fairly healthy economy monetary stimulus does not neccesarily work.
In the past depressions were ended when jobs were created. Often due to wartime spending.
Inflation is critically dependent on "confidence." Without that ephemeral feeling that people need if they're going to commit to spending their earnings or taking on loans, the central banks cannot inflate.
Bill2j - the inflation statistics in the US are cooked, as are the employment figures. The are "corrected" months after their release in little-noticed announcements. This appears to be done at the behest of political appointees that the Clinton administration has placed in key agencies.
If you think Greenspan is scared, how about Rubin? He's in charge of merchandising the Tsy,s. He lowered the minimum amount for private investors to $1000. I'm sure he sees a need to market one helluva bunch of this junk and this is his only option. No wonder he wants out.
Is in full force where I live. Houses and lots have declined, in many places, dramatically in the last few years. This place is actually starting to get affordable across the board. If this keeps up it will cost less to live here than much touted banking center Charlotte, NC. At local stores they are almost giving away clothing and food/ promotions are heavy on all fronts. I speak of the Balt-Wash SMSA now proudly fourth in size in the nation. The Orioles will still make the playoffs and Redskins will be cinderella in 98.
"Our economic growth in the first half of this year was 3.8 per cent. It was supported by the strength of our markets in US and Europe. But the growth momentum has been decelerating. After a revised growth of 6.1 percent in the first quarter, it registered only 1.6 percent in the second quarter. It will slow further in the second half. Our growth forecast for the whole of 1998 is a low 0.5 to 1.5 per cent. Next year is unlikely to be much better."
it wasn't too long ago that the Asian Tigers ( of which S'pore is one of 4 ) were the booming powerhouse economies that everyone was marvelling at.
to think such a sad economic message had to be given during National Day celebrations...
how times change...
I wonder when Singapore will announce their secret holdings of gold... hehe... if any... I'll drink to that.
There's no doubt about it. Also you have to realize that those times were a lot less regulated and a bunch less autos on the roads. Coming out of the depression, if you had cash, you could find a product. My grandmothers maid looked like Aunt Jemima and she had a brother who could be depended on to provide the best sour mash ever tickled a throat. 12 half gallon jars for $20. I had an MG convertible and kept a 5 gallon keg in it at all times. Quite a few excellent parties. It was also good antifreze on the duck hunting trips. Lots more , but this shopuld do.
Donald: Voluntary/involuntary? I hadn't thought about it in those terms until you mentioned it. But it is true, isn't it? The Japanese people reportedly put off purchases today, because it has been their recent experience that prices will decline further tomorrow. .... Reminiscent of our gold market. Eh? ........ When that mindset begins here, I believe we will experience the same result as the Japanese. ...... Look for a governmental pattern similar to FDR's. Official movements to put savings ( but not gold confiscation ) into market activity to stimulate buying and more debt. Taxes on pension funds & etc. ....... It's the only lever they possess.
Donald: Voluntary/involuntary? I hadn't thought about it in those terms until you mentioned it. But it is true, isn't it? The Japanese people reportedly put off purchases today, because it has been their recent experience that prices will decline further tomorrow. .... Reminiscent of our gold market. Eh? ........ When that mindset begins here, I believe we will experience the same result as the Japanese. ...... Look for a governmental pattern similar to FDR's. Official movements to put savings ( but gold confiscation ) into market activity to stimulate buying and more debt. Taxes on pension funds & etc. ....... It's the only lever they possess.
joblessness. It'll be like the Thirties all over again. Unemployment went from 3% in the 20's to just over 12% at the peak of the Depression. 12% doesn't sound all that bad to us, we've had higher rates since then, but in the 30's it was a social calamity and caused widespread demonstrations & even some violence. An equivalent rate in the 90's would be somewhere between 25% & 30%, although social benefits with an unemployment rate that high would be unsustainable for more than a few years.
The unemployed won't be spending or borrowing, of course. Those who still have jobs will be too scared to borrow and will spend as little as they can.
I asked an old farmer from my dad's area what characterized the Depression. He was a young guy in his twenties then. He summed it up basically as: "Not enough people had jobs. And the people who had jobs were afraid of losing them. Nobody would start businesses, nobody would expand their farms, and a lot of people just subsisted." Farmers could always eat, of course, if they didn't lose their farms, but they could find themselves buying supplies in the spring, not knowing what price their crops would bring in the fall. Then the prairies were hit with a drought . . . That's why so many farmers lost their farms and joined the ranks of the unemployed.
The Depression generation were made of relatively stern stuff. When the Boomers, the biggest bunch of whiners the earth has ever known, lose their retirement savings and a quarter of them lose their jobs- look for massive social unrest, and political upheaval. These Boomers are going to demand that the gov't "bail them out." The gov't will try, but they may find that their hands are tied because there are limits to how much deficit financing a gov't can get away with.
pogo, the collapsing tent, and definition of terms
Pogo says: "we've met the enemy, & he is us."
Confused-says: "we're all mirrors of one another."
Civilization's current contraction, and impending implosion,
is rooted in humanity's pursuit
of outside, short-term
solutions, to
it's challenges, problems, and responsibilities.
Paper-money, and artificial credit, have enabled
civilization's escape, from "the anchor"
that would otherwise
keep humanity, & economies, the world over,
grounded in reality.....
regardless of nation, ideology, creed or color.
When civilization, and it's evolving global economy, divorces itself,
from a monetary & credit system rooted in -
gold-backing,
gold-accountability,
gold-discipline,
gold-convertibility,
gold-integrity
gold-endurability,
gold-stability, and
gold-purity .....
then,
all hell breaks loose,
across every nation, land, region, and enterprise
and into every nook & cranny
of human-life and endeavor.
Such a hell,
is so sinister,
because it happens,
so gradually, almost imperceptibly,
in seeming masquerade - as innocent economic benvolence,
for so many, engineered by "popular" governments,
wedded to their favored bankers,
ina union of "creative"
( and ultimately careening )
monetary & credit engineering.
No longer restrained by the natural, often uncomfortable, but realistic
discipline & integrity & accountability
of gold - based
money & credit;
the government & banking money-engineers
have nothing to steer them, guide them, or ground them;
but humanity's growing appetite
for government intervention,
management,
and 'expertise'
...
to make 'life' more 'livable', comfortable, abundant.
But this is not the innate purpose of government.
But never mind that, for now; for the 'time being':
The economic contraction, and impending implosion,
are accelerating.
In 9/'97, I posted, on kitco.com's
discussion-board, a post,
that in metaphorical language,
describes, and partially outlines
this unfolding drama:
"When the tent collapses,
it will not be the center-post that goes first;
it will be the side-posts,
and even the stakes."
Defining/refining some terms:
the "tent" =
civilization's global economy,
based on paper money & artificial credit,
with floating/sinking currencies --
each falling into the abyss, one by one.
the "center-post" =
the U.S. dollar, and the U.S markets & economy.
the "side-posts" =
the major European & other most powerful national economies,
and currencies, such as Europe, Japan, China, Hong Kong, etc.
( and even ) the "stakes" =
the Asian Tigers, and other 'developing' nations, Mexico,
So. Africa, Russia, Australia, Canada, etc.
........
When the tent finally collapses, and completely;
which it has already started to do,
and ultimately must, and will, to completion....
( -because it is built on the political expediency,
and false principle of - creating something out of nothing --
( i.e. - paper money & artificial credit created out of thin air )
...
when the tent finally collapses,
with all - stakes, side-posts, and center-post,
'snapping', crashing, and disintegrating.......
as civilization's fabric is wrent & torn asunder,
from sea to sea,
and shore to shore;
....
those of humanity who hang-on and survive...
will dig in the rubble,
and they will
find
humble, enduring, trustworthy, gold.
We have had this discussion going on years. Inflation. Deflation. You say deflation. I say inflation. Could it be that we are both wrong? Might it be stagflation in the extreme? Then worldwide economic collapse because American can no longer hold on. Ultimately I understand that we end up in a deflationary nightmare, but might that not be interdicted by hyperinflation? The Asian disease might be the template. We might be arguing about ghosts. Our friend, James Turk, recently pointed out that the German stock market rose throughout the Nightmare German Inflation. In fact acted as a hedge, but not quite as good as gold. ( What is? ) In my view Alan Greenspan no longer has to be concerned about pushing on the string. The inflation has been created and now sits fat and sassy in the stock market. The only question is whether or not Greenspan has the stomach to wipe it out by raising interest rates. At the moment, I lean towards lower rates as the next Fed move in an attempt to save the Yen before its too late. Greenspan has the room to maneuver; his Japanese counterpart does not. It happens because it has to. So are you still entrenched in this deflation thing, or have you been changed by the facts of life in Asia. I understand that the Dark Ages followed the collapse of Rome. But are we there? I thought I might show up here on Sunday evenings for awhile. Seems like a good prep for the upcoming week. I invite all to comment. Your friend, USAGOLD.
1 ) CB sales have'nt changed materially--The very fact that they are still selling any amount at these low prices is IMO very bearish. Witness our dumb Cdn CB that just announced another sale.
2 ) POG/Yen has just correlated recently--I can see a strong correlation for at least a year.
3 ) Not much warning on SEAsian collapse--There was for those paying attention. Thailand was reported to having defaulted on an 80 million eurobond as far back as june 97.
4 ) You're not convinced about a lack of inflation--Donald's 18:42 refuted that doubt much more masterfully than I ever could.
I do agree with you that the cost of production should keep price over 260, unless we end up in a cataclysmic situation that I would'nt even want to contemplate.
Gollum ( 20:44 ) You're dead wrong, mate. Inflation is a increase in the total stock of money. Deflation is a decrease in same. Price movements are always and ever one result, amongst many others, of a previous "adjustment" in the stock of money.
There will be scant opportunity for a reasonable discussion of Inflation/Deflation until these terms are no longer DEFINED as being exclusively related to movements in prices.
I will agree that he's very pragmatic & not adverse to revising his forecasts. I much prefer his flexibility over the tunnel vision that many gurus such as Peutz display.
Peutz@If you keep forecasting a crash every 6-12 months you will eventually be
right. But you know what they say about timing...Your contrary indicator record is so good that I would'nt be surprised to see the S&P finish up this week.
Money supply...in the US is rising ...in Asia it is contracting despite massive printing...Russia is also contracting. The question is what the money supply of the WORLD is doing.
You confuse money supply with monetary velocity. You cannot have decreasing money supply and be printing it like mad.
Deflation ( lowering of prices ) can occur with increasing money supply ( "pronting" of money ) due to decreasing velocity ( no one wants to borrow and invest it ) .
As youse guys are both right, I propose that soon we have a tad of inflation. That would change the bonds situation, and compound the markets woe. Good for gold.
I've no doubt that you know what you're talking about, but it would seem to me ( intuitively ) , that if you've got a bunch of kids with marbles and they're worth a certain amount, if another kid comes along with 1000 marbles in his backpack, and everyone knows it, then it really doesn't matter if anyone borrows them or not, the value of marbles still decreases simply based on expectation.
Gollum...using the "new" definition makes discussion impossible...it's
increase/decrease of the money supply. Price rise/decrease are eventual results not causes. Time lags mean much. You can increase supply with no near term effect. Likewise on contraction.
Well he might have. We must however know what it is we are talking about when we say "inflation" or "defaltion".
The thing the Fed tries to control, and the thing that helps or hurt my pocket book is not the amount of dollar bills in the economy but rather how many of them it costs me to buy something.
Rising prices rob me of my savings.
If money supply rises faster than gross national product it tends toward inflation, since we get relatively fewer dollars chasing more goods.
If slower the opposite.
So it is entirely possible to be "printing" ( creating ) money but still have deflation ( of prices ) if it isn't being created fast enough.
There can be supply side or demand side or "cost push" inflation.
Gollum - Just a note on how money is "printed" . . .
Don't think literally of a printing press churning out dollar bills, or even of a computer "printing" money into its memory.
Your statement:
"More money in the banking system due to the printing of more money will also not nessesarily create higher prices. With no demand and no one working companies will not borrow and invest the newly printed money.
In this case the invrease in money supply simply creates lower, ever lower interest rates as the banks have an overabundunce of money but no borrowers."
Doesn't quite describe the way it works.
An increase in the money supply doesn't create lower rates. The Fed sets the prime interest rate via the discount window. Other interest rates are determined by market conditions, i.e. borrower supply & demand, but they have to be above prime, since the banks lose money if they don't get their spread.
Now, remember that money is not "printed." Printed dollar bills just represent fiat money that is recorded in sets of accounting legers.
If money is not printed- then where does it come from? It is created out of thin air as a pair of accounting entries. The Fed creates money by lending money to someone- usually a bank or a government. If MegaBankCorp. goes to the Fed and borrows $10M, the Fed enters $10M as an asset to its accounts. The bank adds $10M to its books as a liability. MegaBankCorp. then has to start repaying the loan to the Fed, and as it does so the money is "extinguished."
If the Fed loans out more money than is extinguished, the money supply will increase. If borrowers pay back more loans than they take out, the money supply will decrease.
What this means is that there isn't "more money in the banking system due to the printing of more money." The money is actually created by the very act of banks borrowing. Now, banks will only borrow if they can make a profit on the spread between prime and the money they lend out to their customers. The Fed can squeeze the economy by raising the rate at which they lend to the banks, which means that the banks will have a harder time finding customers who will pay the higher rates, and they can loosen the economy by lowering the rate at which banks can borrow. This makes it easier for the banks to find customers who will borrow, since they can charge lower interest on their loans.
This means that lower interest rates don't result from an "overabundunce of money but no borrowers." The Fed doesn't feed money into the banks that sort of sits there looking for customers- banks only go to the Fed to borrow the money that they need to lend out to their customers, since they will lose money if they borrow money from the Fed and don't bring in more interest from their customers right away.
Lower interest rates result from the Fed lowering the Prime. The economy will contract if there is an underabundance of borrowers who will borrow at the rates set by the Fed.
Deflation becomes uncontrollable if people will not borrow at interest rates close to or even equal to, zero.
Perhaps similes would be the best way to communicate the concept. Most people think of the Fed in terms of the "shovelling coal" model, where the Fed creates money ( coal ) by "printing" it and shovels it out there into the economy, where it keeps the economic fires burning. They think that if the Fed puts too much coal on the fire it will burn out of control and the economy will overheat and if they shovel out too little coal the economic fires will go out. That isn't the way it works.
The way the Fed creates money could be described by the gas line model. The Fed only creates the money that the banks and governments and other borrowers ask it for. This feeds into the economy and fuels it, but the Fed controls its rate of flow by means of interest rates ( the valve ) so that they can either starve or accellerate economic activity.
I know these concepts are subtle, which is why so many people are mystified by the strange world of fiat money, but they're very important if you want to understand where the key levers of finance are located.
Isn't all of this printed money in the, well acknowledged, inflated stock market? To much money chasing to few shares.
All of the money is being sucked up by the markets. I think this has been discussed here several times, and the conclusion has always been that the inflation is here and it is in the market.
What is the money supply situation in the US, Japan, and EMU countries? Seems like there are forces that tug and pull on inflation/deflation. The extension of credit, and money creation looks very robust in the US. OTOH, there are black holes of debt that counterbalance this money creation. Which "flation" has the stronger hand now?
To the extent that money comes out of the market and into the economy it is inflationary, but to the extent that money vanishes during bear markets, it is deflationary, causing spending to slow.
I seem to recall seeing some numbers along the lines of twenty five percent unemployment during the thirties. The best numbers I could find at the moment say that the peak was about seventeen percent. Keep in mind that the only people who 'counted' were counted. Thus, immigrants and others in the same catagory didn't count, and thus, weren't.
My 'ancient' Webster's New-World Dictionary, 2nd ed.,says:
"inflation" -
( #2. ) - an increase in the amount of money in circulation,
resulting in a fall of its value, and a rise in prices.
To inflate a balloon, means to increase its size/volume.
The 'squabble'/discussion/debate...
might be resolved, like this:
"monetary inflation" - increasing or inflating - money/credit.
"price inflation" - increasing or inflating - prices.
( ( Price inflation being, often....
due to monetary inflation,
-- esp. when it happens -
'over an extended time', and -
' over an extensive area/region'. ) )
( But 'price-inflation', also, & more often, occurs,
over-short term cycles of demand/supply pressure/imbalance.
And this reflects,
simply the dynamic health of the free-market at work. )
The first two components, or ingredients, of "inflation", in monetary study/theory, & REALITY..
are as often discussed here at kitco,
and as identified above:
"monetary inflation"
( and resulting )
"price-inflation".
But the picture, that is economic & monetary reality ( including credit/debt ) ,
where the real market-place of real human beings
live & work & thrive,
and/or - fall by the wayside...
is a 3-part - triangle -
of "inflation" -- it's 'whole meaning'.
#1. Rising volume of money ( -currency ) &/or credit.
#2. Rising Prices.
And most critical & vital, ultimately, of all:
#3. Velocity of money - use of money.
You can create all the trillions
of credits & currencies
your government & banking engineers
can produce & release into the econom ies of the nations & markets & hamlets of the world,
but if the individual & collective people,
refuse to trust it
use it
accept it...
you will have crushing, crashing deflation,
as the world economy of all peoples, wakes up,
and repudiates
this tansgression
against
the liberty
and innate dignity
of the individual
and collective soul
of humanity.
The saying goes that a conservative cant enjoy a meal unless he/she knows someone is going hungry. This underlies the problem today. Today there is supreme confidence in the US/European financial system in and of itself. People believe these currencies are gold. The problem is that the super capitalists want to keep the economy going by easy credit ie keep the spending going but still the piper has to be paid and the problem gets worse as debts mount on citizens. Now the IMF has made "loans" to govt's to pay banks which it KNOWS will never be repaid ie so really it is a give away. I propose that money be printed to payoff our internal debts//give away 10k to payoff credit card bills for a family. This will reinvigorate confidence and increase spending and help the economyu. If the govt bailed out US consumers..the banks would be happy..the consumers would be happy..and the economy would boom. But the conservatives wouldnt. Remember since the debt relief to consumers would create confidence things would get better still. 500 billion for the Debtor Consumer Enhancement Act of 1999.
All Markets, when they have reached a point where a reversal is imminent,Telegraph their future direction ahead of this reversal. This ONE thing that usually happens, is also the thing that so many,...can't see the forrest for the trees,... because the majority becomes convinced that it will only continue...Emotion has characterized every mania or bubble that mankind has probably ever come to. It's been said many times that the begining of a Bull market wants to start with as few participating as possible, and a Bear wants to take as many down with it as it can,it's true!.....................This time is NOT any Different...
For months I have been reading about how if the Stock Market Smashed then it would take PM stocks down with it like in the past.What past are we talking about, 1987?, 1929?
Yet, take a minute to think about where we are in relation to a top or a bottom based soley on the emotional level of two markets right now,Stocks, and Precious metals. As the gold market declined on monday it seemed as if the Kitcoites threw in the towel. I said that Ass.u.me.tions were being made relative to the stock market debacle and the Obvious direction gold would take. Meaning that gold will go down with the stock market. Tuesday came and the Dow went down 300, and gold went Up $5. Hmmmmmmm. So if we think about gold here for a moment, and the emotional level that we have reached,................ after this decline,....down here..............almost at the cost of production.............. with the news that most have ALREADY dumped it.....and Gold Mutual funds selling gold stocks too......do you guys see where I'm going here. Maybe some do and maybe some don't, but either way you can buy the dips until you'll feel like one, or you can follow the CBs and PM mutual funds until you kick yourself. The Smart money didn't get that way doing what the crowd was doing!
It wont work unless it goes to the debtors who are normally at the lowest income level. This will necessitate direct handouts of "printed" money ( isnt it all ) to save the banks and stem bankruptcies and increase spending.
Well, the Japanesse seem to be counting on it. Everyone and his/her brother is banking on the Japanesse lowering taxes to spur on consumer spending. Oh, and btw, I think you'll find conservatives are quite open to the idea.
Maybe some do and maybe some don't, but either way you can buy the dips in the stock market until you'll feel like
one, or you can follow the CBs and PM mutual funds until you kick yourself. The Smart money didn't get that way doing
what the crowd was doing!
Theoretical bailout of consumers. Family has 50k in debt at 15% and ready to go bankrupt. Govt refinancing offers 3% loan over 30 years to takeover the debt. Payments go to nothing and Presto instant solvency for the family if they have income otherwise go BR.
Take the revenues needed by the government and divide them by the total number of citizens in the United States. That's what each person pays in taxes. Take the total amount of money being spent on government programs designed to help people in need, divide that by the total number of citizens, and that's how much everyone gets. Make sure that second amount is printed on handy coupons so people can give them to the needy as they see fit.
Hang in there goldbugs.If it were not for govt. intervention the POG would have flown by now. Looks like the juggleing act is about to take on a few more balls. Lets see how many they can keep up this time. All it takes is one slip up and they all come crashing down.
In times of asset appreciation, be it stocks, real estate,401k's or whatever, John & Jane invest 'till it hurts. Asset rich-cash poor.
In such times, US economy booming supports a strong $US. CB's dump gold
and replace with $US. Printing presses and cyberdollars can continue to
be created as they are instantly invested.
But when assets depreciate, John and Jane sell them and get cash. They don't reinvest because having the cash is safer. No investment, the economy slows. $US drops in value. CB's dump $US ( hopefully for gold ) ,
and all of a sudden everyone has lots of $US. So mant that paying more
for toilet paper and hamburger isn't noticed.
So begins the inflationary cycle. Meanwhile, the printing press
is still running.
( and gold rockets )
As long as people believe the dollar is money it works. In a pinch I believe the govt will takeover private debt at favorable terms to keep spending ALIVE..do they have a choice?..The credit card give away interest rates tell the real story ie they cant give the stuff away because the real world economy is in a big downtrend. The NEW DEAL this time will be consumer debt relief and giveaways by the Corps to spur demand...downsizing will be out.
How the gold standard can keep things under control.
OK guys ( & gals : ) I don't know if my previous post was clear? If it wasn't, let me know.
Once you understand how central banks create money, then you can look at the gold standard and see how it works. The impetus for the creation of the Bank of England, and later the Federal Reserve system, came partly from the desire of merchant bankers to make a ton of money from the government ( from interest income and the currency float ) but mainly from the manipulations by both governments and private individuals of gold and silver coins and bullion supplies.
There were several economic near-disasters caused by cartels trying to corner the gold markets in the US in the 19th century. The Federal Reserve system was supposedly going to clear up this problem ( as well as make a ton of money for its shareholders : ) Also, coin debasement ceases to be an option for the government if the gold is held in central bank vaults, and paper scrip represents the gold.
Now, let's go back to gold standard days. Cooling down the economy is easy- the Fed just has to raise interest rates, as it does in our day. If the Fed would like to heat up the economy, all they have to do is lower interest rates.
Under the gold standard, though, there was an important limit to how low the Fed could set interest rates. In Gold Standard days there was a so-called "gold window" at the Fed where people could go and redeem $26.50 for 1 ounce of gold.
Gold can be used to make money, if you're a jeweller, or a dentist. It can also be worth more in other countries. If the Fed lowers interest rates too much, people will find it profitable to borrow money, redeem their newly aquired currncy, and make a quick arbitrage profit or fabricate it into jewlry, or whatever, and gold will start to flow out of the vault. At some point the central bank will not meet it's reserve requirements.
Of course governments that want lower interest rates can always lower the central bank's reserve requirements. If they inflate by lowering interest rates too much though, gold will increase in real value, since it is a proxy for all commodities, and the arbitrageurs will take away all the bank's gold. Whole countries were becoming arbitrageurs involved in depleting US gold reserves by the time president Nixon saw the writing on the wall and closed the gold window.
In our day and age of uncoupled currencies, governments can devalue their currencies at will, but it was not so easy in the days of the gold standard. To devalue a currency on the gold standard you have to change its price relative to gold, and if you do that you give a windfall profit to the owners of physical gold. Governments for some reason don't like to do this- they think that people with the foresight to own gold are dangerous and subversive, since they're undermining the government's goal of providing windfall profits to exporters.
This is why FD Roosevelt confiscated all the bullion in the US at the then-official price of $26.50/oz before he devalued the dollar to $35.00/oz. If the government has all the gold, then no grubby gold owners can profit from the devaluation.
I think you can see that the gold standard provides financial discipline to a country's money supply. Of course, the gold standard can't do a thing for the people of a country if they don't have the fortitude to stand up to their national governments when it tries to circumvent that discipline, just like the constitution of a country doesn't protect anybody's rights if the people let their government ignore it.
We all succumb to ignorance now and then. It does make me wonder,
though, how many others in authority are spreading mis-information,
it should also make you wonder, as well.
Both PM's are nearing 5 wave down completions which should provide for trading bounces and perhaps the final lows. Only a close above 300 in spot gold would indicate a change of trend. For this week buy Dec Gold at 275 or lower use a $5 stop. Buy Dec silver at 5.08 or lower use a 10 cent stop.
I dunno guy, the rich seem pretty smart when there is political chaos. A couple of hundred thousand spent on privately funded military seems like a good investment in the face of looting and the loss of millions.
the correction about Depression-era unemployment. I'm sure you're absolutely right. It's coming back to me that my numbers were low- it seems that the Roosevelt administration liked cooking the books as much as Clinton's does. They found all sorts of creative ways to exclude people from the ranks of the unemployed as the Depression progressed so that they could claim success in combatting the downturn.
Thou art that head of gold
And also thine the feet of clay
And thine the body, and the mind
That veils the spirit
And thru the years, designed
The soul enclosing walls
That mar our way
Thine is the bright observant eye
The spirit strong
The will to follow
The way, as stumbling on
We see -- clear, more clearly
On the morrow
For ever was it so
The dream, the vision and the grail
But the body
Oh the well loved flesh
With all its stubborn will to fail
We need must pray
Dear head of gold
Be still and pray
Dear heart, in faith forever strive
That other better way to hold
And stumble on with feet of clay
The golden dream to keep alive.
Daniel 2.31. " You saw, O King, and behold a great image."
~~~~~~~~~~~~~~~~~~~~~~~
Swiftly a cold night fell
And such a night
Crisp and clean the mountain air
The stars a blaze of glory
The dark like velvet there
And seeming
Fit source of the long dreaming
And sudden, in the still dark night
In a moment of quiet
We heard a Keening
We stilled our breathing
Better to hear -- half heard
An almost silent ring
Unbroken, smooth -- sustained
A fragile delicate thing
It stirred the heart
A note of half heard silence
Heard, pure and strong, but then
A half note -- just a ring
Above the edge of silence
Heard only
Under the very edge of the great quiet
A hidden edge
Under the soft purple of the desert night
A tone one felt to be
The sigh of the edge of the world
As it sweeps immensity
Never to be forgotten
Mythic voice of the world
Singing to men
Of the lone voyage -- vast spaces
Eons of time and of lonely places
And a music
Far far beyond our ken.
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Today there is no lamentation
No sighing of ancient sea
The blue dress dancing, light glancing
The foam lace floating so free
On golden sands, our children
Laugh and sing at their play
Not knowing, and praise be the Maker
Utterly unafraid
Of the long slow tide of each day
There is a sighing and moaning
Of the ancient slow heaving sea
The deep swells lifting and falling
The grey combers heavy yet free
The fishermen gather their nets in
Their sea eyes keen to the glass
Weigh wind and wave with sea wisdom
Hard learned from the sea,
And know that this too will pass
There is an hissing and surging
Of heavy sea beating hard shore
The rage and the raven of undertow
And the burst and the crash and the roar
And the hard men who sail the great seas
Know well to seek haven and calm
Home, wife and child and the warm hearth
Safe harbour
When the great seas thunder in storm.
I finally found one data series that went back a while. Check the index out during the mid twenties to the early thirties. The All Commodities series turned down before the market crash of '29 and began recovering in 1933. Deflation showed up in the series... Now fast forward to the future...........................................
Americans would take the money, spend it and borrow more. The Japanese would take the money, bank it, and prepare for the worst. That's why their economy has a deflationary bias and ours inflationary. It is unlikely Reaganomics would work in Japan though I would like to think that such good, conservative principles, like tax cuts, would work anywhere. There are only three alternatives to bring back the yen, all favorable to gold: One would be for Japan to unload U.S. Treasuries en masse. Another would be for the U.S. to lower interest rates. The last would be for Japan to raise interest rates. Japan has already stuck its toe in the water with respect to the first, and some, like Adrian van Eck, are reporting secret Japanese gold purchases with the proceeds. The second might be in the offing as it seems Japanese internal policy is going nowhere. The last is an impossibility unless the Japanese have a masochistic streak of which I am unaware. All in all, Japan's hands appear to me to be tied. The next policy move will have to come from the United States, and this appears to be what Japan is holding out for. If things continue as they are now, you can expect round two of the Asian crisis with the lead event being China's devaluation of the yuan.
You're right. Universities don't offer courses in commodities and most people go broke or lose enough money to equal the cost of a Harvard education before learning how to make money trading.
When I say let us speak of inflation, I could be want to converse about how to make a balloon larger. Or about the cosmology of the early moments of the big bang. Or growth in money supply. Or rise in general wage/price levels. Or fixing the flat on my or car. Or whatever.
When Alan Greenspan goes before congress and says that inflation is steady at low levels, he is not saying there is little or no money available nor that there is little or no growth in money supply.
He is talking about wage/price inflation.
Perhaps it would help if whenever we spoke of inflation we said price-inflation or tire-inflation or money-supply-inflation or whatever so we could speak in more nearly precise terms.
Be it noted, in future discussion, if I say inflation I am speaking of wage/price-inflation as does AG. If I speak of some other kind, I shal so denote it.
skinny......Do you think the term ,.... I'm investing for the long term
was talked about in the early 80s like it is Today? Time Magazine Cover "The Death of Equties" in 1980. ....................Now That Would have been the Time to invest for the long term!
I have heard many of the old folks. long gone now, talk of investing for what they called the long haul.
Many went thru the last great depression, they scrimped and saved and died very wealthy.
And as I said on another occasion, the problem was they lived worse than poor people. But they were prepared for the next grat depression, that never came.
Thanks - they were great. One interesting note about interest rates under the gold standard; you say:
"Under the gold standard, though, there was an important limit to how low the Fed could set interest rates. In Gold Standard days there was a so-called "gold window" at the Fed where people could go and redeem $26.50 for 1 ounce of gold. "
"Gold can be used to make money, if you're a jeweller, or a dentist. It can also be worth more in other countries. If the Fed lowers interest rates too much, people will find it profitable to borrow money, redeem their newly aquired currncy, and make a quick arbitrage profit or fabricate it into jewlry, or whatever, and gold will start to flow out of the vault. At some point the central bank will not meet it's reserve requirements. "
This, of course, is exactly what is happening now. Interest rates ( lease rates ) are so low that, to quote, "people will find it profitable to borrow money ( i.e. gold ) and ... fabricate it into jewellry ( i.e. sell it. ) " The result? "... gold will start to flow out of the vault."
No one seems to be able to point me to your original ( recent ) post. I understand that you are concerned about a $200 price for gold and have a chart that provides support for these idea. I have been looking at a $250 price for about 18 months based on the 1996 estimated cost of production of $275. Currently the average cost is estimated at $260 and I'm trying to get a fix on the likelihood that this figure is a good estimate. I had assumed that with the large number of high cost mines that have closed the price would have dropped much lower than $260--but maybe the high cost mines were producing little gold relative to annual production. Do you have any information on the current average cost?