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Guest Post: Why Today’s Deflation Won’t Kill Gold
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I would be looking for a decline of the discount rate into the negative. This will affect the face value of bullion leases, that they may decline while the gold price rises.
But right now, weakness in the $US may not exactly spell currency trouble in the greenback. It could be that the Yuan is collapsing.
And, the Yen is mightier than the sword:
http://stockcharts.com/h-sc/ui?s=$XJY:$USD&p=M&st=1980-01-01&en=(today)&id=p26579836264&a=181133547&listNum=2
Gold will hit the 1220 level before the downtrend resumes. This is the 50% fibonacci retracement off of its last fall from 1265.
When it hits 1220 how large will your short position be?
Much larger than my long position!
Good luck with your trading strategy. I wouldn't mind a pull back in gold to buy more.
Bravo is a fucking troll - ass blow hard. He can talk his position all he wants. I'll bet anyone here a good dinner, that the fucker hasn't bought or sold a Goddamned thing in his life. Except maybe a blow job from a runaway teenage boy in the men's room of a truck stop. Used the 10 bucks left over from his student loan money he saved by buying used books. Still walking around with dried jizz on his t-shirt and shit covered toilet paper stuck to the heel of his Sketcherz.
Player?
This dumb SOB just used the word Nigga.
Douche.
Weak - Way to show your conviction.
so you will own 1 share of GLD and short 2.
As I type this I feel I am wasting my ti
LOL. I'll own a lot less GLD than one share.
Don't forget, I've been right about every other downtrend since I've been posting here. Waste your time if you want, but it doesn't make my calls any less justified.
I called a top at 1260, and when it was in the 1160s I said it would hit 1220.
My previous posts are available to any who look, and I have a track record of reasonable, correct calls.
This beats the idiot who posts "goled to 54000 bitchez" and then runs away until the next bull run starts.
Where is $900 gold, JB? You said you've been right about everything, but I don't see it. Maybe it's hiding in your ass, where you pulled it from.
So, Idiot Bravo compares him self to another idiot and feels he is less idiotic.
Win???
Johnny, you are the exact inverse of the idiot calling for the 54,000 gold and running away.
If you weren't, I'd be looking at 900 gold right now.
You need to learn when to get the fuck out. You usually can actually put up a post or two that's rational, respectful, and at least backed by one of your charts. The problem is, you just can't shut the fuck up, and leave when you maybe have a little credibility.
Maybe that's your problem, Johnny. You over-compensate because your position is shorter than most of ours.
THE ONLY DOWNTREND IS YOU..SCUM BAG..NOW GO ON SOME OTHER SITE AND BOTHER THEM..LIKE WE ARE IN RECOVERY CROWD...OR THE WE BETTER ATTACK SOME OTHER 3RD WORLD COUNTRY SO WE CSAN BE SAFE CROWD...YOU KNOW..THE ONES THAT LISTEN TO THE DR GOEBBELS BULLSHIT...LIKE 19 ARABS IN CAVES BROUGHT OUR COUNTRY DOWN..OR THE sADDAM HAS WEAPONS OF MASS DESTRUCTION IMBECILE CROWD..GET LOST YOU PIECE OF NOTHING...AND TAKE YOUR FABBI GRAPHS WITH YOU..YOU ARE AN EMBARRASMENT TO HUMAN THOUGHT..
Oh no. I got chewed out by an illiterate conspriacy theorist who does not know how to turn off his caps lock key for knowing how to read a chart.
How about this. You take a class of middle school English, and I'll stop posting the truth on zerohedge. Kay?
“What you perceive, your observations, feelings, interpretations, are all your truth. Your truth is important. Yet it is not The Truth.”
JB,
Maybe ZEIT has a sight impairment, all those that use all Caps, do not do it for fun.
Zeit, being right about gold doesn't excuse your bad manners. Your insults don't advance anything.
And to add to that fact... Zeit hasn't actually said anything about the actual future price.
How can you be right if you don't even say anything relevant or make a prediction?
It's just another person that's mad that I was right about the last downtrend being angry and venting. It's okay. I'd be mad if I bought gold at above 1300 and now can only get 1200 for it.
The funny thing is that he/she is WRONG on top of his/her bad manners.
Answer the question, Claire. What is the production cost of FRNs?
From the month of the head of the US mint, they cost 4 cents each to manufacturer. This cost is the same for $1 as it is for $100 Federal Reserve note.
Damn, they should just offshore FRN production to China like everything else.
Instead of $.04 x a few trillion for QE2....
$.000004 x a few trillion!
Imagine the savings! They could help lower the deficit!
PM planchets come from Australia so why not do it for the fake fiat crap?
Completely irrelevant question, since most of the money created by the Fed is not actual currency, but simply computer entries that cost $0.00 per billion. M-1 is $1.6 trillion as of June, and that includes currency, travellers' cheques, demand deposits, and other non-currency items. Good guess is actual currency is about half that.
Off-topic: Has anyone else found it more difficult to find merchants that will accept Traveler's Checks?
Crockett,
I hazard a guess at around $.06+/-.
The more important question is why do we owe printing cost's, face value, and then have to pay interest on all of them until their paid back, which is NEVER.
Talk about compound interest..........
...BReakfast Club!
Damn, that was bugging me.
Regards
...BReakfast Club!
Damn, that was bugging me.
Don't you forget about me...
Master Bater, they're not mad about some arrogant prick being right and them wrong....it's the arrogant prick thing.
Faggot troll.
I agree with you except for one item. Please don't insult gay people. I know this is male culture and I should probably leave it alone, but if JB/MB were gay, he is not representative of gay people.
Sad sack, know nothing, Poser, wanna be, having great fun at our expense? Sure.
Faggot? What did a gay person ever do to you to make you compare them as an entire class of people to Johnny/Master? Please reconsider. Gay's have enough problems in this world with out the hate crime of being compared to JB/MB.
Tongue is firmly planted in my cheek, and I mean it. You could give a shit if he is gay. What you mean is he's weak.
that's right; it will. it will also hit 1255 and 1260 and 1271 and 1282 before the downtrend resumes. Oh, and by the way, there is no downtrend. Mistaking the teeth on the sawblade that tilts upward at 45 degrees and defines the up channel for this bull market is a pretty childish mistake.
Any article on gold, that doesn't discuss prevailing interest rates, is crap.
why?
the price of something has nothing to do with interest rates... it only has to do with market sentiment.
Yes, it only has to do with speculation.
In a world with fundamental valuation, thisson would be right.
Interest rates = money supply = inflation/deflation = price of gold.
Yet, gold does not trade on fundamentals, only speculation and market sentiments, as you correctly point out.
JB you completely fail to grasp the Gold thing, it is NOT just another commodity to be traded and speculated on with ponzi (imaginary) paper figures, it is the one true money that will make it through when all the others die.
always has been, and that wont stop any time soon.
your blinkered view is understandable because you are young and ignorant of history and have been brought up within the goldfish bowl of fiatsco ponzi-dom, so its all youve ever known, but when the system dies, there will not be enough gold to go round, and this will make it more valuable than you can yet imagine.
but within the next 5-10 years history will teach you this lesson, tech analysis will mean jackshit on a sinking ship dude, only the golden lifeboat can save you and if you havent booked your place by the time the stern starts rising..
JB you completely fail to grasp the Gold thing
Claire doesn't want to admit she's a virgin. Too scared to grasp the gold thing...
Gold is just a commodity can grab you by the balls? Well, DUH!
Why is Gold going to 5000 the harbinger of Armageddon - its the derivative "Industry" that is leaving the 4 horses of the Apocalypse into the homes of people, not Gold.
Lets not fear change (although sometimes I have), let the debt fucker collapse.
"let the fucker collapse."
Agreed.
Agree as well.
...
FOFOA says that a $55,000 / oz price does not necessarily mean REALLY HARD TIMES.
It will be the quick reversion of gold's ancient use: the best preserver of wealth.
...
Don't get worked up re Johnny Bravo. He just likes to have fun! So do I!
Although I really do suspect that he and JonNadler are really Sr. VPs over there at JPM who want to get their $10,000,000 bonuses for saving the bank if they DO get gold down to $900.
...
I hope to see you all in line at the ATMs of Thursday August 12. Let's show .gov and the banksters that some us ARE prepared to ACT! Pull $500 (or your local currency) if you are MAD about how they are destroying our country. Let's send a signal...
Yes Gold at $5000 or $55000 will not change the contract between the debtor and creditor - it will just reduce the value of debt and increase the value of money
Power stations will still produce power , farms will still produce produce , dentists will still pull teeth.
If previously vast amounts of revenue clandestinely has flowed to derivative manipulators then soon debt will flow to gold and recapitalize a system starving for sustenance
Has golds rise really reduced peoples purchasing power or is it the long extraction of wealth by people who produce nothing of substance and gain their riches through stealth ?
Bring it on - we have nothing to fear from such a dramatic reversal in itself.
My only caution is that the masters of money will create havoc and let loose the dogs of war before this is out as they realise that they can only survive in a parasitic manner and are doomed to extinction when their bond over the debt slaves is broken.
.
the issue will be finding the fair value of gold in a deflationary spiral.
cause at first the dollar will rise... a lot as credit re-contracts and debt begins defaulting.
but eventually budget concerns with plummeting tax revenue will come to roost, but gold investors will likely see that coming or already are.
Unless, tecno242, creditors would rather accept payment in Au in lieu of FRN's. Guess which ancient currency will become dear then. Your 'rush to the dollar' already happened in 2008. The rest of the world is wising up, fast, regardless of the wide demographic of dupes (no offense to the enlightened) stateside.
Last time I checked, Gold is just as fungible as USD when the banks call. I believe I can state with a high degree of certainty that that is at least one of the reasons why they all possess it. And they desperately need all they can get to keep up with the massive deliveries being demanded these days; what with those pesky mining companies being so unwilling to hedge their production as of late.
If demand for delivery of the real money in exchange for worthless FRN's continues, and idiots desist shooting themselves in the feet via GLD/SLV psy-ops vehicles, we'll get this jig up right smartly.
Regards
Yes assuming the dollar will rise in deflation was based on it being backed by gold until 1971. What is backing it now? Oh yea the military might of the U.S. And I guess that means they must force their own citizens to use FRNs when they are chosing alternate currencies or bartering.
Repeating an earlier comment, in the 30's even with phy. gold artificially held down, the stock of Homestake Mining was up a boat load. Gold as an asset class works, if you stay tuned.
I am a strong believer in purchasing gold... usually, over a long timeline it is prudent to wait until gold is selling at production/extraction cost... however, the rise in the price of gold today is due to the anticipation that gold extraction costs are going to sky rocket... we have already seen peak gold 10 years ago... we have seen peak oil 5 years ago... There is finite gold in the world and a growing population that believes that gold is the only true store of value that is stable. As more and more people start to see the runaway fiat currency collapse approaching, gold will be bought up. However, it is foolish to try to sell at that time for a profit as fiat money will be worthless.
The only true purpose of purchasing gold is to store value and wealth in a tangible, stable form that can be held over time and passed on to future generations. Gold is the ultimate rainy day fund!
Yes. You only sell a bit at the time as you need it, if you need it and only to exchange for other non-depreciating assets or emergencies.
Sell it for what? Worthless dollars?
Nigga please.
I'd rather wipe my ass with a shiny brick of gold than sell it for worthless toilet paper.
Bravo, you are such a ding bat. You dont wipe with the gold, you SIT on it!
Talk about DUMM ASS
Dollars are worthless, remember? Only good to use as toilet paper, so the goldbugs tell me...
At least after I wipe with gold, I can wash it off and sell it!
The dollar, I have to flush, since it's only toilet paper anyway, right?
JB,
Hell NO!!!!!!!
There's fiber in dem bills........................wash,rinse, repeat!.
Yes, as a store of value, your fiat dollars are indeed worthless, or very nearly so. Down 96+% in value in the last 80 years, with a disproportionate cost of that ongoing currency devaluation having been borne by savers and retirees.
Defend that, you lying, malicious, hate-filled SOB.
"Oh, but it only averages out to around 4 or 5% loss a year!" Fine, then I'm sure you won't mind if I hold a gun to your head and demand 4 or 5% of every paycheck of yours from here on out ---- and 4 or 5% of your total savings annually after retirement.
I recommend a trip to the pharmacy to re-up those meds.
It's so very brave of you to threaten other people on the Internet with a gun. What a man!
You HAVE to be JohnnyBravo under another persona, OyJackass, as only JB here routinely displays such an inability to grasp the written word, or else is so completely disingenuous as to completely twist others' words and insert such wholesale red herrings and strawman arguments.
About that gun: it's called "metaphor", asshole ---- go look it up.
Now that you have presented your idiot credentials, care to take a stab at addressing the gist of my above comment? Or will you just continue to sidetrack meaningful points and arguments, as I see you have consistently been doing throughout?
Haha... no, a metaphor, my intellectually-challenged friend, is when you say something like "Her chest was like one of those great, old iron battleships that sent so many men to the bottom of the sea". See, I'm comparing her chest to a battleship. That's metaphorical.
Saying that you're gonna put a gun to someone's head, that's not metaphorical at all. It's just bullying.
Calm yourself. Someone disagrees with you. It is not, repeat, not the end of the world.
Actually, your comparison is a simile.
Akak, was speaking metaphorically, and in your haste to shit all over everybody in the room you jumped him. He wins that round.
Correct. My comparison was indeed a simile.
I am duly chastened.
Don't be chastened, just back the fuck off a little bit. Bring something to the table, then fight for it. You might be surprised at your reception.
Heh, you might be alright, grandpa.
There's nothing hip about using racial slurs. You just make an ass of yourself.
I junked him for that. Thanks for saying it.
He didn't use it as a racial slur though.
"Niggah, puhleeze" has passed into the accepted lexicon long ago. Can't help it if you're just not "hip" to the language of the youth.
I may not know the phrase "niggah, puhleeze", but I sure recognize "sockpuppet" when I see it.
I agree, the Sockpuppet was awesome! I think he was originally property of Pets.com and then got sold. Last I saw, Triumph the Insult Comic Dog was violating him.
I certainly didn't take it as racial, I just though it showed what an absolute fucking DORK he is.
Like he just took off his Spock ears and decided to play cool.
It's pretty obvious you don't like him, so it kind of doesn't matter what he says: you're not gonna like it whatever it is.
It's my nature to cheer for the underdog and I see a lot of hate and bile being spit JB's way, more than it would seem is deserved.
I think a lot of people on here don't know how to disagree nicely, meaning they lack decorum. It's fine... America as a whole has gotten rawer and uglier with time... and some of these comments here are indicative of that.
I guess I fail to grasp why it makes people so angry when someone says gold's going to lose value. So what? It's their opinion! Let it go. It's like people arguing over whether the Mustang or the Camaro is a better car. Who the f*ck cares? Stop arguing for the sake of arguing.
Actually, if you've really been around a while, you might see that I've stuck up for him on occasion, and been more civil than most. He's a college student, bright kid, studies a lot, and I give credit where credit is due: If more kids in this country spent half the effort he does paying attention to the world, we'd one helluva lot better off.
The reason I go after him is that his arguments, whenever they begin to fall apart, turn shitty and personal. He also only trolls around the gold threads so he can stir shit up. That makes him a troll.
He does seem to bring something to the table though. Certainly makes the Comments section a bit more interesting. It's like a car crash whenever he posts.
I'll follow along and I'll rant on him when and if he deserves it. So far, I haven't seen anything completely out of line, but I'm sure I've missed much.
And you're Rick James, bitch? Sorry, not buying what you're selling. If he wanted to riff on that with a tiny sense of comedy (and maturity) he could have just as easily said "Goldbug, please!" w/o offending a soul.
Yes, looks a lot like button pushing.
ZH will have enough problems in the future from the presidential administration without racist comments peppered throughout.
Whether they're in common use by the latest MTV generation, or not--we don't need that shiznit here.
Did you honestly just say, "nigga"?
BWAHAHAHAHAHhahahahah. Ha!
Okay, I really had just thought you were a pretty smart kid with limited life experience because you were young. Nevermind.
Now pull up your pants so we can't see your underwear, put your hat on straight, and turn down the Vanilla Ice. I just heard your Mom say that your peanut butter and jelly sandwich was ready.
Fucking douche.
That is funny stuff ...
JohnyB is an
A S S C L O W N
Minus the clown.
Again, guys & gals, don't sweat Bravo! He's here to have fun, like many of us!
Unless he really IS a Sr. VP at JPM, which is my working theory. Then that means he is here WORKING.
:>)
Okay, grandpa.
Jackoff, I hope you slip and fall face first into a puddle of AIDS.
You're so sweet! Thanks, Gramps!
Part of the difficulty in this kind of prediction is figuring out what government is going to do as a result of the economic problems. If the government had let the defaults happen, the price of gold wouldn't go as high as it eventually will. Inflation also takes time to make it out to the economy at large.
However, it is probably quite a safe bet that they will inflate as much as possible.
Video killed the radio star.
MP3s killed the video star
"I would store my hard work in a form that will allow me to enjoy the fruit of my labor one day."
Eventually the production of everything will drop to levels never even thought of... the world runs on credit now.
I had this one nutbag tell me he will be able to buy a whole block of skyscrappers in Chicago for one gold coin, I told him if that were the case the last place you would want to be is in that place.
Why not?
It's going straight to 50 bajillion, right?
I think that when the United States becomes Zimbabwe and we all eat canned ham and hide under our porches that gold will go much, much higher than 50 bajillion trillion.
I will wait for the day it hits 25k so we can have a zerohedge picnic.
NO ASSHOLE..YOU ARE GOING STRAIGHT TO ZERO...THREE POINTS ABOVE YOUR IQ..NOW SHUT THE F UP AND GET LOST..BETTER YET..GO JOIN THE ARMY AND GO TO IRAQ...YOU KNOW NOTHING SELF RIGHTEUOS PIECE OF NOTHING...
Maybe you can cut some of the fat off your back and sell it to pay for my journey?
quite funny, but i junked you anyway. (like i do all your post's)
I junked you.
I always claim my junks, but in your case, I have just decided to announce that I junk you in perpetuity. If nobody else claims it, just assume it was me.
Join the club! Now, if he repents and mends his malicious and malignant gold-hating ways, I may reconsider, as I and many others have done with HarryWanger.
You mean if he agrees with you, you'll stop junking him?
That's very mature of you. Quite fascist too.
er, congratulating someone for waking up after being mired for ages in a miasma of media induced torpor is hardly fascist.
eg I don't agree with Cheeky B on a lot of things, but he at least tempers his arguments with reason; so never a junk from me.
On the other hand JB sometimes starts with a reasonable position, but that quickly deteriorates the moment anyone rationally disagrees with him.
Which is why he gets junked, and, apparently, trolled too.
Zeit: Please stop the troll on troll violence.
Regards
Jackoff,
It has nothing to do with his opinion. As the above poster said, he starts out with a reasonable position, but can't help but slide into attack whenever his position gets a little hard to support.
He's better than you though, because at least he has a position on something, other than that we are all Nazis.
Not all, but enough to be worrisome. Certainly enough to distrust the large majority of advice that's dispensed on here by supposed experts.
Never the less, many of the articles are quite insightful and some of the commentators are actually rational and not looking to take out their anger on their ex-wives, children who hate them, failed lives on anyone who happens to disagree with them ON THE INTERNET.
Where in the Hell do you get this shit from? You need to step back and take a deep breath. There is some anti-semitism here, granted. I make no excuse for it, or condone it. But I think that some of what you are assuming is racism is simply NOT siding with Isreal politically. Read carefully what's being written if you are going to take a stand. Many of these statements are political NOT personal. Don't confuse the two, or you become a race baiter, which IMHO is worse than a racist.
You said you like to like to call a spade a spade, but you sure are quick to piss all over anyone else who does. We don't play that here.
Yes, I agree that being oversensitive to anti-Semitism is a capital crime. Um... yeah, not so much.
It was called the Holocaust. It was really bad. 95% of the anti-Israel crap is simple Jew-bashing dressed up to look innocuous. "Oh, we're not anti-Semitic, we're just anti-Israel." Yeah right. I would bet my left nut that these same people would be the first in line to turn the gas on in the showers and the fire in the ovens.
Sorry, there just can be no overreaction to anti-Semitism. Not possible.
The reason it's so disturbing here is that on most sites, a person who posted anti-Semitic tripe would be booed off the stage immediately. On this site, you've got people trampling children to get in the anti-Jew conga line. That's not cool.
I will always go nuclear when I see that sort of shit.
"It was called the Holocaust. It was really bad. 95% of the anti-Israel crap is simple Jew-bashing dressed up to look innocuous. "Oh, we're not anti-Semitic, we're just anti-Israel." Yeah right. I would bet my left nut that these same people would be the first in line to turn the gas on in the showers and the fire in the ovens."
Well, that says it all Mr."Spade a Spade". Thanks for the clarification, weirdo.
Just the facts please, not your precious impressions, because it is entirely possible to disagree with obviously brutally unjust Israeli foreign policy without hating the religion. Laughing at it and the other two Abrahamics, maybe, but not hate. More like pity.
No, my loathing I reserve for the violent sociopathic racist fucks starving kids under the ruse of 'protecting their citizens' from glorified fireworks and then screeching anti-semitism at the top of the mainstream media's lungs anytime someone calls them on it.
Kinda like America. I don't hate Americans, just the plutocracy they've stupidly allowed themselves to be dominated by.
The only thing thinly disguised here, as noticed by another reasonable poster, is your incessant race-baiting, Mr."calling a spade a spade" racist.
Regards
I don't begrudge you the right to spout off when Israel does something wrong. I'm not pollyannish about Israel; they are a country of flawed human beings, just like every other country in this world.
However, if you ONLY harp on Israel, if you do not equally harp on the outrages perpetuated by the Muslims, then yes, I'm going to strongly suspect that you are an anti-Semite.
On this board, there's many who make it quite clear what they are, israhole just first among many. That doesn't mean I think all of the posters here are racist scum... just the actual ones who perform the diarrhea from the mouth trick.
Your calling me a racist because I used the phrase "call a spade, a spade" is pretty thin gruel, GoinFawr. Please look up the history of the phrase; it far pre-dated America's racial troubles.
shit for brains...you know nothing ..you see nothing..you hear nothing....guy's like you have no real independant thought ..I am sure you are stupid enough to believe the Warren commission as you are stupid enough to believe the 9-11 commission..and you are obviuosly stupid enough to believe in the jobless recovery commission..people like you will get chewd up and spat out a hundred thousand per minute...keep believing the corrupt government and see hwre it gets you..asswipe..
I also believe "The Earth is Round" commission.
I'm gonna guess you're not too into them either, eh?
He was probably making the connection to Weirmar Germany, where that sort of thing did happen. You are right, you didn't want to be there. But gold could get you out of there. And if you had to be there it was better to have gold.
The real difference was alternate currencies were stable. Folks didn't think in terms of Goldmarks as the paper Mark was flushed. They would get daily quotes in Sterling and Dollars. The Government however, retroactively set speculative loans to their original value in Goldmarks so that people couldn't game the banks on inflation, as they also (unsuccessfully) attempted crackdowns on currency and commodity arbitrage.
Now, do you see the CAD or CHF being presented for goods when the Reserve Currency of the World gets flushed? Me neither, which is why silver in hand and gold in reserve will emerge when inflation gets away from the engineers. Those on fixed incomes, as well as civil servants, will take a beating as their dollars are immolated in their hands, and their ability to demand more suffers a terrible lag to reality. Yes, it is coming - "they" would rather wrestle with that than deflation.
"I had this one nutbag tell me he will be able to buy a whole block of skyscrappers in Chicago for one gold coin, I told him if that were the case the last place you would want to be is in that place. "
Obviously, that was a fool. Riddle me this... Gold has been used for atleast 6000 years as a measure of wealth. Hundreds of fiat currencies have failed but gold has never failed!
You are seriously exaggerating. You could buy a block of apartments in Weimar Germany for an ounce of gold, and you will likely be able to find similar deals in the US. Hell, you can already get deals like that in Detroit RIGHT NOW. I doubt if he said "skyscrapers". You just assumed that was what he meant. More likely, it's a block of shitcan apartments. It might be worth it to buy it and demolish it, turning it into farmland, for which 1 oz of gold is probably generous.
'ýou could buy a block of apartments in Weimar Germany for an ounce of gold'
Uhh, I don't think so. Evidence please?
And you really think you will be able to trade an ounce of gold for a block of apartments in the USA? Seriously?
So a block of apartments will be, let's say $50,000 (massive deflation) and gold will be $50,000 an ounce?
Wow...that's some scenario...
Sounds pretty irrational to me, which is maybe why the 'believers' here get so emotional when anyone disagrees with their dreams of being rich by buying a lottery ticket called an ounce of physical.
(FWIW I have been long gold above $1200 and trade it frequently, never from the short side, as I think the upside is quite high compared to the downside)
BTW, if an ounce of gold will buy a block of apartments, why buy more than 1 oz? I'd be pretty stinkin rich if I owned a block of apartments.
(What are the renters gonna pay their rent with? Food?)
I once read somewhere, VW, that at its worst in Weimar Germany that for the price of one Mercedes car, you could have bought the COMPANY itself! I mention this to you since you probably know more about Germany than I do.
If gold makes its leap into the many thousands / oz that I and many others think, then yes, we will be able to buy assets for CHEAP. We will be RICH. And then it will be our duty to rebuild and return this country to Liberty.
IIRC, Marc Faber, in Tomorrow's Gold, was making a point about how stocks could be fantastic buys in very inflationary times. He made the point that the price of the good was increasing due to inflation, but that due to inflationary uncertainty, the price of the stock lagged to such a degree that the market cap of Mercedes was at one point approximately 300 times the price of one of their cars.
This may be the vignette you're referencing.
Faber is one of the few guys I would actually listen to. he's been very right the last few years, if not longer (I don't track everything he says).
He now believes strongly in gold, and thinks there's a good chance (but he's not 100% sure as he is with gold) stocks will do well in the coming inflation.
Makes the most sense of any prognosticator I know of.
Plus, he's a fun guy, has a great life, living in chiang mai with lots of beautiful women.
Some of the doomsters here could learn from that example. : )
Riff, yes I think you have it right. A whole company for the price of 1 car does sound way wrong.
A company in a terrible economy like Weimar, yeah, OK, 300 of their cars sounds about right.
Thanks Riff!
I did study weimar waaaaay back when I was in uni, and someone just sent me an e version of that book that I think is a history of it (when money dies?) looking forward to an interesting read, maybe some good examples in there that will clear this up.
To repeat, I think gold is probably a good way to preserve your wealth over the next decade, but it's hard to see how it will make a poor person rich.
Still no one has laid out a scenario for me that makes sense.
If we have hyperinflation, then prices of things in dollars will be outrageously high, and so will the price of gold. No gain no loss.
Now of course I do think gold can outpace some other things and you could be relatively better off, but the idea that you will be be instantly rich sounds like a lot of hopium to me.
Yes. I don't think you should look at an investment in gold as a way to get rich. Instead, just look at it as a great way to store your wealth. It has many advantages to paper money or paper stock or paper gold, for that matter. The only disadvantage I can see is that, if you hold it yourself (which you should), it's vulnerable to being stolen. Other than that, it's the perfect guarantee that your wealth will not evaporate if any shit ever does hit the fan.
I would agree in part, and disagree in part--hyperinflation wouldn't make someone who held 50 gold coins ultra-rich, it would make all of his neighbors suddenly very, very poor.
However, as things got progressively shittier, and you've spent 5 of your coins buying food while others starved--prices of things in REAL terms would necessarily drop precipitously.
So food=expensive, commercial real estate/art/antiques=cheaper by the day during hyperinflation. So since your purchasing power didn't go anywhere during the hyperinflation, and stuff unrelated to necessities like food dropped=you're much richer, comparitively speaking, than your neighbors.
Unless they know you have the gold, and also know that you have no ammunition--in which case you'll be dead soon.
Rationality on the zerohedge board?
Someone call Guinness!
Congratulations, newbie! For being such a consistent asshole, you have earned a coveted membership on my "automatic junk" list.
Jackoff seems to be trying to earn a spot in the troll hall of fame in his rookie year.
Yes. Someone wise once said "Judge a man not by his friends, but by his enemies".
I look forward to making many enemies here. It's just such fertile ground!
At least we agree on one thing: you suck! (and obviously that applies to me from your end as well... neat, huh?)
Mako, you are correct about compound interest and the ultimate death of any credit system. But you seem to have fallen for the usual brainwashing about credit growth and economic growth. You imply that our modern economy could not exist without this "creditmoney" nightmare. You are wrong. Wealth is not created by a printing press. The greatest economic growth in history occurred under a deflationary metallic standard.
Can you please stop posting these one note repetitions of nonsense?
Mako try to get some new material you pathetic repetitive shill.
sold 1/2 my gold & silver bar(1 of 2), they make a good doorstop! @ $1170, to buy groceries.
Gold will go down with all markets.
Who says you can't eat gold?
Provide historical precedent for gold going down with the markets. I've never seen such a thing.
Late 2008. Margin calls lead to sale of any and all assets to cover. Gold dropped from over 1000 to about 760. Might happen again. Probably only come down to 1000 this time as folks looking for a good deal put a floor under the price.
And how long did that last?
When that happened, it suddenly became very difficult to find silver. I was buying literally everything I could find, and accumulated a pretty good sized hoard at those firesale prices. I will do so again if it happens. A tiny correction like that is far from the end of the world for owners of precious metals.
When that happened...
But it did happen. You asked for an example and I gave it. Otherwise I don't disagree with you.
While you are technically correct (you could have cited a given single day of trading, or even a given hour, minute, or a tick and been technically correct), I was looking for an example of a secular trend where stocks and gold went down together. A 6 month correlation isn't much more significant than a 1-week correlation. 6 years, yes. 6 months, no.
Those who wait for more deleveraging are likely to miss the boat. Too many people see the writing on the wall. If you think supply was tight in 08, wait for the next big dip in prices. Thre won't be any supply available, meaning the price isn't a market price.
While you are technically correct...
That's the best kind of correct.
Thre won't be any supply available, meaning the price isn't a market price.
Preachin' to the choir.
Every time a little deflation rears its head, the Fed stomps on it.
That's their function. The thing is that gold still fetched the same amount of the other things being liquidated, but we were having a GLOBAL money market run in progress. The dollar was days away from vaporizing. The Fed would have HAD to backstop every FDIC, every MM - in fact, that's precisely what they DID do.
There will be no dollar scarcity, not as long as they are freely conjurable by the central bank.
Crockett,
You bet your sweet ass, it will stop there, IF it get's there...........India jumped @$1,045.00 oz. on tons,300+ if I remember correctly.
The Pac Rims,ZH members :>),and India will snarf up all that's left.
Soon, I will be not be surprised if we see the T.V. Dealers, cease to advertise, and hoard.
DosZap, that is an interesting observation, when they stop advertising to sell it.
I agree that the "India Put" means no sub $1000 gold ever again.
Just got money wired to me. Time for me to go out and buy some more yellow shiny stuff.
A week ago the GDXJ had a upper bollinger band flare out, right before the Kinross purchase of Red Back Mining and also the China announcement to invest in miners. Something is brewing below the surface. Hopefully the url will work. If not, it is a gold weekly chart from 2007 with a silver/gold and a xau/gold chart below.
http://stockcharts.com/c-sc/sc?s=$GOLD&p=W&b=5&g=0&i=p24219082951&a=157399896&r=613This is very simple....
Let's say economic parity = 100....
Economics go to 60/100's....
What happens to "all prices" upward propensity....?
Understand.... now ?
All goes down....all of it....
There are no tooth fairies....
Those who think gold and deflation are related don't understand either gold or deflation
Despite a plunge in markets today, the Dollar dropped. The Dollar is no longer being viewed as the safe haven it once was. In fact it is clear that it is official US policy to devalue the dollar. For obvious reasons. Let's look at recent events: despite a falling dollar, the Fed governors have been jawboning/pre-announcing MORE quantitative easing, and a full-scale bailout of the housing and banking sector through mortgage cramdowns paid for with more printed dollars. That is bold to say the least. Particularly in view of the US economy in the midst of a depression that is turning sour once again and rising commodity costs. Despite deflating incomes, employment and real assets the 1 year CPI (June) is stuck at 1.1%. More money printing will simply send it into the Fed's danger zone. And then what? Tighten in the midst of a depression like Herbert Hoover? Stuck between a rock and a hard place because the old policies and theories just don't work anymore. The only way out is to devalue the dollar. But that has its risks. Gold is the only bridge over the troubled waters that lie ahead. All currencies have similar risks.
Caviar,
" full-scale bailout of the housing and banking sector through mortgage cramdowns paid for with more printed dollars".
Yep, this is for VOTES.................
Fannie n Freddie, and Barry Sotero to the rescue...........
(Have to keep the Dems in the race).So he can fundgepack us more.
What he said!
Thing I fear is that Congress will call a lame duck session after the election the R's win. There is not a whole lot of time to finish Obamacare, "Financial Reform" and Crap & Tax.
Fortunately, though, the Bearing has a nice round hole that just needs a little grease...
What we have to have is going up in price. What we can do without is dropping in price. Deflation is an illusion when the digital printing presses are running 24/7. We're getting closer to the day when the big boys know they have to cover their asses or be left in the dirt. QE is being ramped up again, openly in the USA and covertly in Euro land. Get that market up again for the election and to take some profits before the skyscraper of cards comes down like the WTC, and to round up some real metal while it can still be found. When central banks around the world get serious about getting theirs, our GS and JPM won't be caught napping. Anyone paying attention knows gold and silver puts you on the high ground when the dam breaks.
Tree,
Deflation is when your running the presses like you said.........next stop, Hyper Inflation.
This is where you had best have your ass covered......with things that keep you alive.
So let me make sure I understand this...Au is currently a bit over $1200...according to Abby...the chart says Au can drop to $900, but this will not "destroy" gold ??? I guess she is ok with a loss of near 25%. Granted Au is not "destroyed" just my wallet is......?????
It all depends on which side of the equation/perspective you are on. When you jump, do you leave the earth, or does the earth leave you? When gold jumps, does gold leave the dollar or does the dollar leave gold?
This is just insane...does your fuckin brain orbit around the FRN?
You're aware that there are other currencies out there, right? Why the obsession over the dollar gold "price"? I get the whole spec trader trying to gamble to get something for nothing thing, but shit, man...look at the POG *not* just in FRNs. You'll notice something.
Gold is an alternative to paper currencies, not without some drawbacks, but also with many advantages. When I take a trip to the 3rd world, I and many like me, pack some Krugs because these things have value in ALL currencies, in ALL nations. There is nowhere that doesn't accept gold and where gold is not translatable into local paper.
In fact, lives have been saved by having a K-rand sewn into clothes after a robbery or theft. Gold is disaster insurance.
WTF are you precious dollar folks going to do with your 25% gain if they lock the banks due to another global run? THAT is what the paperbulls are hoping comes back!
In fact, they are salivating at it, HOPING we get another Sep 08, where we were literally HOURS or DAYS at most away from total systemic collapse. Do you HONESTLY think you'd be able to access your FRNs at such a time??! If you do, are you stupid?
Review what late 08 had going on; a global, multitrillion dollar run on all MMs, a total collapse in commercial paper, interbank lockup, etc. The problem, yes, was apparent cash scarcity due to deflationary redemptions and default. So the Fed provided cash. It's either that or they will LOCK the fucking banks and you will NOT be able to cash out of anything.
Being a paper bull liquidationist vulture means you are planning to go through a nightclub AFTER the fire has started and AFTER the stampede for the exits has begun, in order to pick up dropped wallets and cellphones. Are the paper bulls seriously stupid enough to believe that THEY have a secret exit that nobody knows about?
I suspect that, were you to examine your physical hoard both before and after a FRN/oz price decline from 1200 to 900, you would find your gold unaffected.
exactly. So why the obsession here with the $ price?
And why would anyone complain about the $ price of something being manipulated lower?
If someone forced the price lower of the vintage Ferrari I want, I'd be ecstatic.
Ah...relativity theory hits the commodities market........in a deflating market both $$ and Au will go down. So the question is do I do $$/Au spread and work the spread between the two hoping if I choose correctly which will lose more, or less than the other.
Aside...your hyperbole question is more one of perspective...am I watching one jump from far away or am I the person jumping. If the latter, since I am less dense than the earth and I am applying force to go up it is me jumping off the earth though I am sure there is some minute component of the earth moving away from me as well.
There will be no significant deflation, Ben is not gonna let it happen, even if it costs destroying the dollar...
Less "dense" than the earth? You're sure the earth moves away a tiny bit, huh? "sure"?
Ever heard of Isaac Newton?
let's hope that Paulson is out from Gold and short so that we can go finally up
Deflation in housing prices and the stock market will not affect Gold.
Gold is great in a deflation because it's MOOLA. Real money with real liquidity. It's value buys more and more assets as the asset values plummet like hell on earth. Everyone have their longboards ready?
classic Johnny Bravo analysis...entirely unencumbered by a historical frame of reference or any ability to see beyond the paper mirage presented to him. Just pat him on the head and tell him he's a good boy...back to sleep.
POG means nothing just some bits and bites determined by JPM, HSBC et al. I think the POG will drop to 0 as the comex and LBMA wont be able to deliver since they are leveraged at least 45-1. My bet is that silver will lead the way since it is a tiny market compaired to gold and supply is running dry since it is consumed faster then produced. Will be fun to watch how JPM et al will be brought to their knees and then killed off. Say bye bye to the trust backing fiat.