Groupthink here would definitely be for the US dollar tanking and gold going to the moon.
But could that be wrong?
Could gold collapse along with all the other commodities, and could the US dollar continue to rally in 2009 as a worldwide safe haven (versus other collapsing currencies)?
Could the dollar gain strength even with Bernanke going to the printing press?
Could gold prices tumble as the jewelry market dries up?
Kick this one around, because the US dollar and gold are not acting like we thought they would. Yet.
Posts
47 comments:
There still allot of flight to safety.
http://www.financialweek.com
/apps/pbcs.dll/article?AID=
/20090112/REG/901099964
/1013/TECHNOLOGY
Now, a looming spike in commercial real estate loan defaults could cause even more pain.
As the commercial real estate market withers, banks holding the securities could be forced to take big write-downs, further battering already bruised balance sheets.
Some of the biggest financial institutions have huge, potentially troublesome commercial real estate stakes, Standard & Poors data shows.
Based on information in their most recent financial reports, Citigroup and Barclays each had more than $20 billion worth of commercial mortgage-related investments. Merrill Lynch, acquired by Bank of America last year, had some $19.7 billion in such investments, according to S&P.
The commercial real estate market’s increasing weakness could lead to a big jump in the default rate on those securities, Fitch Ratings said in a report last week.
People all over the world seem to be hoarding/accumulating gold.
Countries are building up their gold reserves.
The actions of the Fed are highly inflationary in the long run; others think differently.
Are foreign countries preparing to stop support of US Debt? This seems crucial.
Given the manipulation going on with EVERYTHING, Comrade Keith, anything can happen.
I view gold and silver as insurance policies, not investments. I purchased accepting the possibility of losing half the total value. And since I've lost faith in our corrupt government, I'm sleeping much better knowing I have something tangible.
There is a time for everything even the US Dollar, but is now a time for more regulation
http://www.walletpop.com/blog/2009
/01/12/is-it-time-to-regulate-
real-estate-agents/
The Wall Street Journal that the Securities and Exchange Commission should regulate NAR the way it regulates financial advisers. "Realtors are currently able to make any statement they wish regarding the investment potential of real estate, no matter how ridiculous," he says.
That's a great point, and one that I hope Congress will look into. The primary residence is the single largest investment that most people will ever make, so the counsel they receive on it certainly seems worthy of regulation.
Real estate agents are allowed to make outrageous predictions about future value growth -- those predictions are often based on nothing except the desire to make a sale, and consumers have no recourse if they turn out to be wrong.
the Securities and Exchange Commission should regulate NAR the way it regulates financial advisors
Regulating them will just give them more credibility. Eventually, people stopped listening to snake oil salesmen. Then it was tent show evangelists. Now it is realtors and Bobby Mays.
Is inflation going to hit this year?
My guess, which I backed up with my dough, is no.
Let's not quibble, there will some inflation, some deflation and lots of sideways movement. But I am not planning on paying $8 for a Big Mac next December.
Well, as they say, opinions are like a**holes, everybody's got one and they all stink. So, here's my 2 cents worth. The emotional desire to own gold is going up, but indiviual people are not buying because they are keeping all available cash ready because of lay-offs, and the need to fill basic needs such as food, shelter, clothing, transportation for themselves and their family. Buying gold is a luxury item right now. If there are fewer physical buyers, then gold prices will decline. I think to probably $700-$750/ounce. The dollar will remain stronger relative to other currencies for the next 1-2 years.
denninger is wishing upon a star with his lastest rant...
gold is going to the moon...
know why?
several reasons, but here is just one...
gold rises with wars...
too many people (check)
too few resources (check)
war (tick tock tick tock)
pretty simple math class.
The removal of speculative trading pressure drops the price of everything - housese, stocks, oil, gold, etc. - than we thought. I think gold will go up but it will take much longer than we think to counteract the removal of hedge funds and a near depression. 2010 or beyond.
HI TOOLS!!!!
HERE IS MY OPINION!!!!
TYRONE SAID IT THE BEST!!!!
FOR 99.9999% OF US IN THE WORLD, METAL IS STRICTLY AN INSURANCE POLICY!!!!
BUYING METAL AT A CONSUMER LEVEL WILL NOT YIELD SUBSTANTIAL GAINS DUE TO THE SPREAD CURRENTLY CHARGED BY BULLION DEALERS!!!!
IF YOU CHOOSE TO INVEST, GO TO A COMMODITY BROKER, BUY FUTURES AND REQUEST DELIVERY OF THE 1 KILO BARS!!!! THESE BARS CAN ACTUALLY BE SOLD (IN PHYSICAL FORM) ON THE EXCHANGES IN THE FUTURE IF THE PRICE GOES UP!!!!
THAT BEING SAID, THE SMALLER AMOUNTS ARE PRETTY COOL TO HAVE ON HAND!!!!
THERE IS NOTHING LIKE LISTENING TO THE MAGICAL CLINKS FROM A BAG OF JUNK SILVER OR THE CLINKS OF GOLD COINS!!!!
HAVE FUN, I'M OUT!!!!
TWITS!!!!
TOOLS!!!!
DOLTS!!!!
DOPES!!!!
Does anyone really understand why governments and their central banks have tonnes of gold? I did say tonnes, didn't I......and the average schmuck thinks he/she can actually compete with that?
The gold fanatics are truly warped and they bot too much on the net, but, if it makes you feel better, go for it!
If you are that scared sh*tless about it, buy freakin' food, idiot.
This is what it feels like holding gold right now.
HOLD scene from Braveheart:
http://www.youtube.com/watch?v=N1NupxasQWs
Good questions, Keith.
Following your first three are a few of my own. Think about it…
“Could gold collapse along with all the other commodities?”
“Could the dollar gain strength even with Bernanke going to the printing press?
“Could gold prices tumble?”
------------------------
Could China wake up one day, realizing that it would be in their very best interest to just dump the dollar?
Could there then suddenly be a mad rush away from the dollar, leaving Americans looking shell-shocked, blinking their eyes as its value tumbles to zero while GOLD skyrockets.
Could Americans then suddenly panic, make a run on the banks to withdraw their meager savings so that they can rush to the grocery store and buy food while the shelf prices increase by the hour?
Yes indeed, “Kick this one around”
-Mammoth
.
Am I alone here or does anyone else feel that their day is not complete until their called a
TWIT
TOOL
or DOLT?
.................................
Here's my read...
The dollar is going to get stronger short term. Gold is going much lower short term. The story for the next two quarters is the US economy is in trouble, but the rest of the world is in worse shape. Deflation will be the story in the next six months, not inflation. Inflation will follow.
Tom
Gold is never bad to have but it is not a move that makes sense right now. It is hard to liquify and only grounds a currency like say real estate grounds an economy. Uh hum ... so ... paper money/cash will be king. The amount of money destruction that is upon us will take out almost all the "virtual dollars" out there. Just think of a world where the credit/debit cards go away.
Paper money will be king.
DMP
The dollar is not going to go down until we start the inflation cycle. The dollar is the reserve currency and the rest of the world is in just as much trouble so I say "dollar?...relative to what?". J.K. Galbraith has made a good case for this scenario. I am actually expecting the euro and pound to reach parity with the dollar.
Gold will continue to deflate and the Indians will be selling theirs for food. The time to buy gold is when we start to inflate (2010 or 2011).
Note: I hold a small amount in coins as a disaster fund.
Bernanke and Krugman say the US dollar is going to the moon and the US economy will be back on track after they stimulate it with a few more trillion dollars of borrowed foreign cashola.
What can be wrong with that?
Wow, commenters pretty down on gold right now. Me, not yet.
Sure, it could fall further.
But the bottom line is that there was a trillion dollar deficit this year and there will be one next year. The fed has a target of 0% rates couple with a host of new programs aimed at 'quantitative easing'.
All commodities will make a come-back beyond current levels within 2009. They could go down further but they will be back.
Patience is a virtue.
Question,
How much gold should one have?
In what form?
What I mean is, is having 10 1oz coins going to help or
100?
250?
or ???
Gold as a hedge or as insurance I understand.
I also understand you can't twitch at every drop or run out and sell every time it goes up $1
.
If you can't handle the swings in Gold don't get in.
Let's not quibble, there will some inflation, some deflation and lots of sideways movement. But I am not planning on paying $8 for a Big Mac next December.
Nobody, relitively speaking, will be working in 6 months. Obammmmmmmyyyyy will provide them all with a comfy living standard. (Illegals will do the best just like his aunty.) What does it matter if some of them are digging ditches and filling them back in. The bond market will fail shortly. If any one disagrees just go out and sink all your cash into treasuries. Of course your not going to do that, neither will the Chinese or anyone else with a brain.
Back to digging ditches and being paid in printed or funny money. Remember, Obammmmmmyyyyyy won't have to print money for our new ditch digging economy if you buy all his treasuries. If you don't buy his treasuries he will be printing money for the new ditch digging (green) economy plus all the multi trillion doller deficets.
All I'm saying is thats an awful lot of funny money chasing an ever shrinking basket of REAL goods. I don't even want to talk about heicoptor boy buying treasuries. This is all cartoon shit.
Dollar to the Moon!
The reason there was a depression in the 1930s was that the dollar was tied to gold and drug down in value with it.
The wonderful innovation of fiat paper is that the government determines the value of the dollar, not the sociopathic goldbugs.
"The Wall Street Journal that the Securities and Exchange Commission should regulate NAR the way it regulates financial advisers. "Realtors are currently able to make any statement they wish regarding the investment potential of real estate, no matter how ridiculous," he says."
...and financial analysts aren't? Sounds like another waste of taxpayer dollars for nothing that will be enforced.
"Gold is never bad to have but it is not a move that makes sense right now. It is hard to liquify..."
How so? I went to the gold and silver shop a couple months ago and unloaded all my gold. It wasn't as fast as selling a stock, but it wasn't like selling a house, either.
The dollar is going to get stronger short term. Gold is going much lower short term. The story for the next two quarters is the US economy is in trouble, but the rest of the world is in worse shape. Deflation will be the story in the next six months, not inflation. Inflation will follow. Tom
-----
I agree w/ Tom...but add, throw out any stategy that would be considered a "buy/hold". The truth is, a strategy that works for now or for the next 6 months, will have to change for the subsequent... So, dollars may be fine for the moment, maybe commodities roar back, I plan to catch that wave as well....as that cycles down, maybe back to dollars or euros or?
So the dollars/gold thing is everchanging...my plan, your plan, better be flexible. Buy/hold is finito! If you are a good trader, this is your market for a while.
Off topic sort of, I think we are headed to capital controls of some sort...maybe limits on holding gold, possible..hopefully not likely.
It's probably too early for Gold. The Fed hasn't really cranked up the printing presses yet. The Obama stimulus hasn't started. The sheeple are just waking up to the fact that big trouble is ahead.
Timing this kind of thing is impossible. We don't know what the central banks and governments are going to do or when, we don't know which companies are going to fail next, and we don't know how the public will react to any given event. This is the most chaotic, unpredictable time of my life. There are way too many variables to even begin making predictions.
For now, I'm just holding dollars (and Euros) and getting prepared - mapping out my escape routes, so I can flee the dollar/euro if and when I need to.
$5000/oz...$50/dozen eggs
"If you can't handle the swings in Gold don't get in."
-------------------------------
Exactly.
Gold is a process, not an event.
Everyone is long Gold, already a bad sign in itself, so are Gold infomercials on tv, so are the dozen business books on Gold.
Deflation first then inflation later, which means commodities will continue to remain soft. Trying to be too smart and buy Gold now is like trying to short T-bills too early (see ETF TBT).
- Stocks stable
- Commodities weak
- $USD stable
- Inflation only when China recovers
Silver I know. Gold not so much.
Old silver coins are real handy.
The greenback seems to be the most known currency throughout developed and undeveloped countries. Street kids in China want "dollars", as in American dollars; they'll give you a deal for an American dollar.
Dollars are attached to the beauty of the American lifestyle, not the American. If you can speak Mandarin, you can chat it up with the kids in China and discover that even a simple fat-ass American, to them, is their American Idol. Again it's the lifestyle, not the fat-ass. They want to know what you own, how old you are, what car you drive, how many of this and how many of that you own. They're very curious about the typical American lifestyle.
When Americans no longer are to be admired or envied for their lifestyle, the American dollar will lose it's luster.
But, if Americans can pull their creativity back out of their asses, and recreate the world - again - the American lifestyle will flourish and those kids all over the world will again be negotiating pens & bike bells for dollars.
There you have it and I didn't even have to write a book.
Paul E. Math had a good point:
But the bottom line is that there was a trillion dollar deficit this year and there will be one next year. The fed has a target of 0% rates couple with a host of new programs aimed at 'quantitative easing'.
The existing debt and future deficit's are not good.
On timing gold and silver:
If the SHTF, trying to buy at that moment will probably not work. If you don't have some before a singular event, you will have none.
and could the US dollar continue to rally in 2009 as a worldwide safe haven (versus other collapsing currencies)?
Don't know/care. The time to buy US dollars was the "dollar death spiral" and "50% REAL inflation, they are cooking the numbers" scare of 2007-2008. I was "greening up" back then and - unlike many of my compatriots - I'm not rushing to buy dollars now. This train has already left the station, time to look for something else to diversify into.
Could the dollar gain strength even with Bernanke going to the printing press?
The rouble did, so why cannot the dollar?
Could gold prices tumble as the jewelry market dries up?
Again, don't know/care. I prefer silver exactly because it has dropped unhesitantly off its March 2008 highs, and because it's "neither fish nor fowl" wrt investment/industrial value. A mixed-use asset is not that bad in times of uncertainty.
/* hooray, after 1.5 years on HP/S&A.blogspot.com I've discovered that italic HTML tags do the job */
/* hooray, after 1.5 years on HP/S&A.blogspot.com I've discovered that italic HTML tags do the job */
So let me blow your mind then. If you use and , you get the text bold. Is that something or is that something?
Folks, you really need to learn about the OTC foreign exchange: the Euro, Pound Sterling, Japanese Yen, US Dollar, and Swiss Franc make up 90% of the currencies traded. The others are all in the minority including the Norwegian Korona, South African Rand, Aussie, Loonie, and Kiwi.
What that means is that if there's a massive run on the dollar, all the other opposing currencies need to balloon in valuation but if you'd noticed, most trade in ranging patterns, either bearish or bullish. So all and all, it's difficult for the USD to follow in the footsteps of the Argentinian Peso because it only takes a few banks and institutes to dump their Argentinian holdings for the currency to implode w/o net losses on opposing currency pairs. If the USD did the same, all trade between Japan, Europe, UK, and the rest of the globe would seize up, immediately.
So the way I see it is that as deflation takes hold, competitive devaluations between the pairs gradually reflates the PM spot prices with a bullish patterns towards commodity based currencies like the Aussie and the Rand.
One of the causes of the greenback strength could be the fact that developing nations are devaluating their currencies very fast, thus making millions of their citizens to seek refuge in the dollar. For instance, the Argentinean Peso is in the toilet and heading to 4 per 1 USD by year end.
DEFLATION makes the dollar worth more. . .here is the rub - if you hold say one million dollars in cash or T-bills, etc. and a house is 1/2 price, and an office building that was one million is now worth 600K, and stock in Coke, Merck, ConEd, etc. is 1/2 price. . . then holding dollars for foreigners is good. . .they can scoop up great US assets at bargain prices. . .hotels, golf courses, etc. Think about it - anyone holding US cash is able to buy more. . .eventually, the market will come back, and then buyers of buildings/hotels, etc. US Blue Chip stocks, will do quite well.
Once again, I have to demand from the Inflationistas how, exactly, you can have inflation when only the supply side can raise prices. The demand side (i.e. consumers) can't get more income from their tightwad employers. So that $50 pack of a dozen eggs? They will ROT ON THE SHELF since people getting paid $10/hr won't be able to afford them.
There is NO MECHANISM whatsoever in the USA anymore for inflated currency to reach the consumer, EXCEPT through credit. And the massive credit bubble is OVER. Employers are not going to be doubling and tripling wages and salaries to compensate. So any attempt to invoke hyperinflation will FAIL, absolutely.
I view gold and silver as insurance policies, not investments.
------
Ditto.
I too sleep sound at night knowing that my MONEY (real tangible coins) is in my control and not just some claim against someone else's assets.
Think long and hard about that!
A stock certificate is a claim against the current and future net worth of some corporation. A corporate bond is the same thing but with different terms and conditions.
A government bond is a claim against future tax receipts.
A dollar bill is a claim against the collective debts of a society, subject to government policies designed to continously diminish the value thereof over time.
A gold or silver bullion coin has proven to command global purchasing power for thousands of years and can be reasonabally expected to continue to do so for as long as homosapians walk the face of planet Earth. :)
If the SHTF, trying to buy at that moment will probably not work. If you don't have some before a singular event, you will have none.
=====
'Within eight days in office, Bush said in his last news conference that the most urgent security challenge Obama will face is preventing another attack like those of Sept. 11, 2001.'
Talk about a SHTF senerio... What if President Bush is right and someone cooks off a nuke in the US to launch the war against Iran.
Do you really think that anyone holding physical PM would let go of it anytime soon for anything less than 10 times its current price?
Back in the '70s, I attended a very FUN trade show.
As I entered the main tent, a young woman in a playboy outfit handed me a few casio chips and told me that I could use them to buy food & drinks with; and I could gamble with them.
She pointed to a stage at the rear full of prizes, including a John Deere tractor/mower, a large T.V., and many other items ranging in value from $25 to $500.
She told me that at the end of the show, all of the prizes would be auctioned off to the highest bidder for the poker chips.
I was really excited and walked straight to the craps table. In few short minutes, I lost all my chips when another young hottie informed me that I could get more poker chips from the vendors at the show. [Hint: That's the whole point... to give the vendor's power to attact attendants.] Each vendor was alocated a limited supply of chips and forced visitors to hear their pitches and see their products before parting with a few 'chips'.
So like everyone else at the show, I had to spend a lot of time away from the hot 'chicks' working the gaming tables; to collect 'chips' from the vendors.
Then with a pocket full of chips, I headed back to the gaming tables.
The casino started out real tight. [meaning that odds favored the house by a lot- thus consuming most of the chips and driving visitors back to the vendors].
After a few hours, most of the vendors had run out of chips to hand out (and in fact had sucessfully pitched most of their targets)... SO IT WAS TIME FOR THE CASINO TO LET PEOPLE START HAVING FUN. The games increased payouts, thus shifting the odds in favor of the players. The more you played, the more chips you collected. EVERYONE was having a blast.
I started the day out with 10 in chips, lost them, collected no more than 200 in chips from the vendors and lost most of this before the casino switched gears; but about 1 hour after the switch I had amassed over 500,000 in chips.
That's when the auction for the REAL PRIZES started.
WHAT HAPPENED AT THIS AUCTION IS WHAT HAPPENS WHEN FIAT CURRENCIES DIE.
On the stage there were a limited number of real things up for auction. At this point the trade show poker chips had no value whatsoever, except the limited purchasing power to bid on the prizes displayed. After the auction ended the chips would be worth nothing whatsoever.
The auction started for a few of the smaller items. At first the crowd was stingy, most folks wanted to hoard the chips and had thier eyes on the BIG PRIZES (such as the large T.V. and the Lawnmower). The purchasing power of the 'chips' was very high at first as nobody knew how many chips anyone else had. Several nice items worth $50 to $200 went for less than 1000 in chips. That is until the riding lawnmower worth over $2,500 went up for bid.
Folks went crasy bidding this thing up and there were lots of bidders bidding over 100,000 in chips. The winning bid for the mower was 450,000 in chips.
After the mower, there were about 10 gifts left most worth $100 to $200. EVERY ONE OF THESE GIFTS sold for more than 500,000 in chips.
What happened was that the bidding for the mower made everyone realize how many chips everyone else had left. Right after it sold, groups of people began combining chips to have the purchasing power to buy anything of value before all the prizes were gone.
This folks is what a CRACK UP BOOM followed by a total currency collapse looks like in real life.
(c)2009 Stephen J. Roddy, Blogger - True Stories. Posted to Soot and Ashes by the copyright holder. Kieth is authorized to repost this on any of his blogs.
Keith ~ I am caught between two sets of apparently flawless arguments. Who am I to argue with Peter Schiff (hyperinflation)OR Mike Shedlock (super deflation)? Each case is super convincing and I am...convinced. I'm sure it will happen one way or the other in the not too distant future. But which one? What's a guy to do? All I can come up with is: try to hedge one's self for either outcome. If a guy had, for example $100,000 in cash sitting in safe deposit boxes and a home safe on the one hand AND three or four dozen ounces of gold (or silver equivalent) it seems to me that, IF we experienced a total collapse in commerce due to hyperinflation, the liquidity of the cash as well as its increased value of the dollar would offset any perceived loss on the value of the precious metals. On the other hand if we start zooming into hyperinflation, the gold coins would recapture a lot of the lost value of the cash, even as the liquidity of the cash would permit quick moves into additional gold, food, clothing, and other tangible goods. I wish I knew which way this thing is going to go, but I'm not that sure. Bulls and bears can prosper, but pigs go broke. It reminds me of the case of a guy who was practicing at a civic arena to do a bungee jump from the ceiling that night. The cord was set to vault him back into hyperspace after the fall, but unforeseen to anyone, the extended rope was six inches too long and he hit his head, snapping his neck, and killing him instantly before the rebound. The inflationary rebound is set up, alright, but will the economy be killed before it happens (for example, might the banks unexpectedly experience cascading cross defaults and totally bring down the house of cards faster than societal reflexes can respond?). Meanwhile I watch your column daily to determine if it's time to start stocking up on more canned tuna.
Yes for now you are gettin played, eventually you will be right but by then the masses will have been fooled out of gold. The rich get richer, the middle class get poorer.
Coconutz!
the dollar will be the strongest of all currencies. Its strength will be relative but it will be the currency everyone will want to hold as we get farther along into this depression.
the problem with gold (like the dollar) is that the miners can just dig more of the yellow stuff up as the price increases. Just like more dollars can be printed. mining is not as easy as printing but still, the supply can and will increase.
"The Wall Street Journal that the Securities and Exchange Commission should regulate NAR the way it regulates financial advisers. "Realtors are currently able to make any statement they wish regarding the investment potential of real estate, no matter how ridiculous," he says."
...and financial analysts aren't? Sounds like another waste of taxpayer dollars for nothing that will be enforced.
----------------------------
yea, that's the ticket, more regulation so that people don't have to think for themselves.
That is part of the problem. there is so much regulation that people just accept the word from "experts" because they think it is against the law for them not to be 100% truthful and open.
Historically, as wealth is removed by the collapse of bubble asset prices and folding of insolvent companies, the need for cash to reinvest into newly devalued assets emerges. This causes citizens, countries, business, and investment funds to liquidate. The exception being the end game for a currency which we are clearly not in for the US Dollar. With all this in mind, we may have one more rally as oil and commodities could skyrocket in the Obama Administration. Bottom line, in this market GOLD IS A SPECULATIVE BUBBLE.
LOOK AT LONG GOLD CHARTS BEFORE YOU INVEST!
Peahippo,
here's a simple mechanism, Supreme Beloved Great Leader Obama and his cheerleading team (aka Congress) promises all will be well if we stop bailing out rich bankers and help the little guy for a change.
Laws and passed and signed and employers are required to add a zero or two to the end of everyone's wage/salary. The government sends the employers a check to cover the added cost (the bailout). Oh and minimum wage is also gets two zeros added to the end. Then as that money bids up prices the government throttles down those checks and employers are forced to use the profits from those higher prices to make up the difference.
Another option is to stick with the current bailouts and stimulus packages, in a year or two everyone in the US will be employed by the government anyway and wages can be jacked up at will.
You can't think about gold as if only Americans buy it.
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