This page has been archived and commenting is disabled.
Guest Post: How To Speculate Your Way To Success
Submitted by Doug Casey of Casey Research,
Source: JT Long of The Gold Report (4/20/12)
So far, 2012 has been a banner year for the stock market, which recently closed the books on its best first quarter in 14 years. But Casey Research Chairman Doug Casey insists that time is running out on the ticking time bombs. Next week when Casey Research's spring summit gets underway, Casey will open the first general session addressing the question of whether the inevitable is now imminent. In another exclusive interview with The Gold Report, Casey tells us that he foresees extreme volatility "as the titanic forces of inflation and deflation fight with each other" and a forced shift to speculation to either protect or build wealth.
The Gold Report: You told us about two ticking time bombs last September, Doug—the trillions of dollars owned outside the U.S. that could be dumped if the holders lose confidence, and the trillions of dollars in the U.S. created to paper over the 2008 liquidity crisis. It's been six months since then. Have we averted the disaster or are we closer than ever?
Doug Casey: Things are worse now. The way I see it, what's going to happen is inevitable; it's just a question of when. We're rapidly approaching that moment. I suspect it will start in Europe, because so many European governments are bankrupt; Greece isn't an exception, it's the norm. So we have bankrupt governments trying to bail out the European banks, which are bankrupt because they've loaned money to the bankrupt governments. It's actually rather funny, in a perverse way.
If it were just the banks and the governments, I wouldn't care; they're just getting what they deserve. The problem is that many prudent middle class people are going to be wiped out. These folks have tried to produce more than they consume for their whole lives and save the difference. But their savings are almost all in government currencies, and those currencies are held in banks. However, the banks are unable to give back all the euros that these people have entrusted to them. It's a very serious thing. So European governments are trying to solve this by creating more euros. Eventually the euro is going to reach its intrinsic value—which is nothing. It's the same in the U.S. The banks are bankrupt, the government's bankrupt and creating more dollars so the banks don't go bust and depositors don't lose their money.
I'm of the opinion that if it doesn't blow up this year, the situation is certainly going to blow up next year. We're very close to the edge of the precipice.
TGR: Is the problem the debt, or all of the currency that has been pumped in?
DC: It's both. We have to really consider what debt is. It's the opposite of savings because savings means that you've produced more than you've consumed and put the difference aside. That's how you build capital. That's how you grow in wealth. On the other side of the balance sheet is debt, which means you've consumed more than you've produced. You've mortgaged the future or you're living out of past capital that somebody else produced. The existence of debt is a very bad thing.
In a classical banking system, loans are made only against 100% security and only on a short-term basis. And only from savings accounts that earn interest, not from money in checking accounts or demand deposits, where the depositor (at least theoretically) pays the banker for safe storage of his funds. These are very important distinctions, but they've been completely lost. The entire banking system today is totally corrupt. It's worse than that. Central banking has taken what was an occasional local problem, a bank failing from fraud or mismanagement, and elevated it to a national level by allowing fractional banking reserves and by creating currency for bailouts. Debt—at least consumer debt—is a bad thing; it's typically a sign that you're living above your means. But inflation of the currency is even worse in its consequences, because it can overturn the whole basis of society and destroy the middle class.
TGR: What happens when these time bombs go off?
DC: There are two possibilities. One is that the central banks and the governments stop creating enough currency units to bail out their banks. That could lead to a catastrophic deflation and banks going bankrupt wholesale. When consumer and business loans can't be repaid, the bank goes bust. The money created by those banks out of nothing, through fractional reserve banking, literally disappears. The dollars die and go to money heaven; the deposits that people put in there can't be redeemed.
The other possibility is an eventual hyperinflation. Here the central bank steps in and gives the banks new currency units to pay off depositors. It's just a question of which one happens. Or we can have both in sequence. If there's a catastrophic deflation, the government will get scared, and feel the need to "do something." And it will need money, because tax revenues will collapse at exactly the time its expenditures are skyrocketing—so it prints up more, which brings on a hyperinflation.
We could also see deflation in some areas of the economy and inflation in others. For example, the price of beans and rice may fall, relatively speaking, during a boom because everybody's eating steak and caviar. Then during a subsequent depression, people need more calories for fewer dollars, so prices for caviar and steak drop but beans and rice become more expensive because everybody is eating more of them.
Inflation creates all kinds of distortions in the economy and misallocations of capital. When there's a real demand for filet mignon, there's a lot of investment in the filet mignon industry and not enough in the beans and rice industry because nobody is eating them. And vice-versa. And it happens all over the economy, in every area.
TGR: But inflation rates don't seem to reflect the vast amounts of currency that central banks have injected into the U.S., European and other economies. The U.S. inflation rate was 2.93% in January and 2.87% in February. We haven't seen signs yet either of a hyperinflation or a serious deflation that we were warned would come with quantitative easing (QE). Does that mean QE is working after all?
DC: No. It's not just the immediate and direct consequences of what they do—everybody loves it when trillions of dollars are created. It feels good to have lots more purchasing media. The problem arises with the indirect and delayed consequences. All these dollars and euros—and Chinese yuan and Japanese yen—that have been created have basically gone into the banks, but the banks are not lending them out. The banks are afraid to lend and a lot of people don't want to borrow because they're afraid of taking on more debt. So the dollars that have been created, mostly invested in government paper, sit on the banks' balance sheets. They are not circulating in the economy at the moment. That's why prices aren't skyrocketing right now.
That's point number two, though. Point number one is that I wouldn't trust those inflation figures in the first place. The governments of Western Europe and the U.S. fudge inflation figures as certainly as the Argentine government fudges them, just less overtly and outrageously. They do that because they want to keep the perception of inflation down; they don't want people panicking, which is a pity, because the public should urgently do something to protect their capital. They also don't want to see Social Security payments and other payments that are tied to the consumer price index go up. They don't have the tax revenues to pay for them and will have to print even more money, which just exacerbates the problem. Official inflation numbers are unreliable; only somebody very naïve—like a TV anchorperson—could possibly believe them.
If you think of inflation as an increase in the money supply above the increase in real wealth—which is actually what the word means—the inflation rate is actually quite high at the moment. Real wealth is being created at lower rates than it historically has been, while the money supply is increasing tremendously. It's just a question of when that inflation rate manifests itself on a retail level. You've got to think like a real economist, not a political hack like Joseph Stiglitz or Paul Krugman. You have to see not just the immediate and direct consequences of something, but the indirect and delayed ones.
TGR: Given that this is an election year in the U.S., won't the government do everything possible to maintain a stable market and stop inflation?
DC: Sure, the government wants things stable. I have no doubt it is trying to keep the stock market up. It wants the stock market to stay high because pension funds and insurance companies and the public at large are invested in the stock market. It wants interest rates low, although artificially low interest rates are an economic disaster in that they encourage people to borrow more and save less. It would prefer to see precious metals, and all other commodities, at low levels. The argument is made that the governments of the world, especially the U.S. government, are manipulating the prices of gold and silver to keep them down, because when they increase, it's like financial alarm bells going off.
But they can't control the prices of the precious metals. In the real world, cause has effect. When you create trillions of currency units, eventually the price of those currency units relative to other things will go down. That's called inflation. Whether he's lying or he really believes it, Fed Chairman Ben Bernanke said he can control the levels of inflation. When it gets too high, he thinks he can rein it in somehow.
The current world monetary system is going to come undone. That's my prediction, and I'm betting on it massively, personally.
TGR: You've talked about the possibility of abandoning paper currency altogether and going to a digital system.
DC: The most important thing is to get the government out of money. There should be a high wall between the state and religion and an equally high wall between the state and the economy. I don't even like to talk about what governments "should" do as far as money is concerned because the governments shouldn't be involved in money—period. Money is a medium of exchange and a store of value. It shouldn't be a political football, nor should it be used as an indirect form of taxation, which is what inflation is. It should be a pure, 100% market phenomenon. Central banks should, therefore, be abolished. Paper currency should cease to exist—except as a receipt for money held on deposit. Historically, that's how it originated.
You could use any kind of commodity as money, but gold has proven since the dawn of civilization to be uniquely well suited for use as money. It's a market, which is to say a voluntary, phenomenon. Whether you represent that gold with bank notes printed by individual banks or by digital currency—which I'm sure the world is going to—makes no difference. But having the state in charge of currency is idiotic.
TGR: You've written about China moving away from the dollar. Do you see that happening gradually or all of a sudden? And would it be in favor of its own currency or more investment in gold? What impact would that have on gold prices?
DC: First of all, I think the nation-state as a form of organization is on its way out, and that a 100 years from now people will look back at countries like China and the U.S. the way we look back at medieval kingdoms today. In the meantime, the dollar is important because it's the numéraire for trade all over the world. At the same time, fewer and fewer people trust it, and they increasingly realize that it's the unbacked liability of a bankrupt government.
Eventually, it's going to be replaced by something else. India and Iran are trading between each other using gold and oil. Why use a piece of paper issued by a hostile and unreliable third party? The Russians and the Chinese can see how crazy it is to trade between each other using dollars, which all have to clear in New York. But people are still accustomed to using currencies issued by nation-states, and the U.S. dollar is everywhere and is therefore convenient. But it's a hot potato. People no longer trust it. I suspect the Chinese yuan will replace the dollar gradually—assuming the Chinese don't destroy the yuan as well. They're also creating trillions of the things to keep the economic bubble in China from imploding.
Before the Chinese yuan can replace the dollar, people must have confidence in it. The best way they can gain confidence in it is if the volume of yuan is limited and redeemable by the issuer in something real, something tangible. That's going to be gold. So I expect China will continue buying large amounts of gold to back its currency. China is already the world's largest gold producer. Considering that only about 6–7 billion ounces of gold have ever been mined in all the world's history, China alone could drive the price of gold much higher.
TGR: At your Recovery Reality Check summit in Florida April 27–29, you'll be talking about how business cycles have been turned on their heads. Is this the time for investors to sit tight, making only small adjustments to portfolios, or must they take more drastic action to protect their wealth or, better yet, profit from volatility?
DC: I think volatility is going to go way up in the future as the titanic forces of inflation and deflation fight with each other. This is a very poor time to make big bets in almost any conventional market because it's impossible to tell how things will finally settle, where the next major war will be and so forth. Stock markets around the world are not cheap now and bond markets are fantastically overpriced. Currencies are no more than floating abstractions. Commodities have been in a long bull market, so they're no longer a low-risk bet. Real estate—the most obvious thing for bankrupt governments to tax—is dangerous. In the developed world—especially in the U.S.—it floats on a sea of debt, which has driven it to artificially high levels. It's coming down as we speak, but it's nowhere near a bottom.
So there are very few places where people can still attempt to preserve capital. Everybody is going to be almost forced to be a speculator to try to stay in the same place. Speculating means capitalizing on politically caused distortions in the marketplace. That's the proper definition of the word.
TGR: What can people speculate on?
DC: Unfortunately, they have to second-guess where the money will go. I've always liked resource stocks, especially resource exploration stocks. It's a tiny market. If a fire gets lit under gold and silver, and I think it will, companies in this nanosector could explode 10, 20 or 50 times upward in price. It's happened many times in the past. Right now, these stocks are relatively cheap, so I like that as a speculative vehicle.
TGR: Rick Rule has cautioned against generalizing about the entire junior mining sector as a whole, because so many of these companies don't find anything. How do you decide which resource investments are worth looking into? Are there criteria? Is there some kind of a litmus test that you use?
DC: Rick is absolutely correct about that. Although the sector is capable of going upwards 10 or 20 times as a whole, most of the stocks in it are total garbage. The only gold, uranium, silver or whatever appears on their stock certificates, not in the ground they control. There are thousands of these little stocks, and yes, we have criteria we use to evaluate them. We use a tried-and-true due diligence process we call The Eight Ps of Resource Stock Evaluation to separate the wheat from the chaff among speculative investment opportunities.
TGR: Would you share that with us?
DC: Sure. This is a guide to help investors ask the right questions about every individual company they're considering. This list comprehends the essential, but you could write a book about each of these eight points.
- People: Who are the key players in the company and what are the track records of the companies they've managed? This is by far the most important criteria.
- Property: What resources are in hand, and what (if any) are the additional resources they expect to find? How well proven are they? Assessing this takes geological and engineering expertise.
- Phinancing: Does the company have enough cash to meet its next-phase objectives or have the ability to finance the cost of reaching those objectives? It's no longer a case of grubstaking a prospector and his mule.
- Paper: Capital is almost always raised from the issuance of new shares. Is there a lot of cheap paper out there that will keep the share price down? Will new or existing warrants or new shares dilute your own shares? Who owns most of the paper?
- Promotion: How and when is the company going to get itself (and its stock) noticed?
- Politics: Is the country or region mine friendly and stable? Are foreign investors welcome? Is there environmental resistance?
- Push: What's going to move this stock? Drill results, merger or acquisition, increase in the price of the underlying commodity, resolution of a legal issue?
- Price: What are the potential price moves of the underlying commodity that could have either a positive or negative impact on the value of the company?
TGR: How hard is it to find a company that passes muster on all eight counts?
DC: It's very hard. It's hard enough to look at the basic statistics of thousands of companies. Then you look at the people behind them. Generally, we try to find the people first. We stay away from those who have no history of success and have established that they have questionable characters. We look for people with long histories of success or appear to be about to embark on a lifetime of success. The most important piece is people. That's what we really look for most of all.
TGR: Based on all the calamities that could occur, how will you adjust your investing philosophy?
DC: Let me put it this way. We're going into something that I call The Greater Depression, much worse and much different than what happened in the 1930s. I think my friend Richard Russell said it best: "In a depression, everybody loses. The winner is the guy who loses the least." It's very tough to keep capital together today, much less make it grow in the years to come.
But I think it's possible. The thing to remember is that most of the world's real wealth will remain in existence regardless of what happens. The key is to position yourself so that more of it falls into your hands as opposed to falling out of your hands. That's what we're trying to do, to increase our relative share of the wealth in the world. We're not looking at boom times. What's coming will be the opposite of what we experienced during the artificial inflationary boom of the 1990s, where everything was going up—stocks, real estate and so forth. This is a time when, in real terms, most things will lose value. Most people will experience a real decline in their standard of living.
TGR: As we've discussed, at its root, paper currency is a substitute for something of value. Energy, similar to gold, has intrinsic value. It's always in demand. In the past, you've expressed optimism about uranium, natural gas and oil. As the dollar becomes suspect, do you foresee sources of energy becoming more valuable?
DC: Absolutely. I'm very bullish on oil. The world runs on fossil fuels today because they're ideal sources of highly concentrated energy. Unfortunately, all of the easily available, cheap fossil fuels have basically been found. The low-hanging fruit is gone. This is what the peak oil theory is about. Plenty of oil remains, but it's going to be more expensive to get it. To find oil now requires going to exotic places without infrastructure and with big political problems. It requires going much deeper into the ground, exploring under the ocean, using new technologies, and so forth.
Gas is secondary to oil when it comes to concentrated sources of energy. Of course, with the development of new technologies, primarily horizontal drilling and new fracking techniques, a huge amount of natural gas has become available all over the world. But it takes tremendous capital to retrieve it, and it also faces political problems.
But in summary, I'm bullish on energy of all types. There is plenty of fuel out there. It's just a question of the price level, so it becomes economic to retrieve it.
TGR: So how do you invest in finding the rest of what's out there?
DC: You look for companies that are exploring for it. One of the important things that makes me very bullish on oil is that most of the oil in the world today—something like 80%—is not owned and produced by BP Plc (BP:NYSE; BP:LSE), Exxon Mobil Corp. (XOM:NYSE), Royal Dutch Shell Plc (RDS.A:NYSE; RDS.B:NYSE) and companies like that. It's mostly owned and produced by national oil companies such as those in Mexico, Iran, Saudi Arabia and Venezuela. These state oil companies are universally corrupt and inefficient. The profits from the oil are generally used as piggybanks by those governments, not to build capital and find more oil. Furthermore, where governments allow private exploration, such as Iraq, they take about 80–90% of the potential profits from oil, which of course discourages exploration and exploitation of the resource. The problems are almost entirely political, but they're big problems.
TGR: Speaking of the politics of energy, are you still bullish on uranium in light of the politics of what's gone on since the Fukushima meltdown?
DC: Yes. I've said it before and continue to say it. There's no question that nuclear power is by far the safest, cleanest and cheapest type of mass power generation available. Fukushima survived one of the most severe earthquakes in recorded history with no problem; it's just a pity they didn't adequately plan for a 45-foot tidal wave on top of it. In addition, those plants basically were 50-year-old technology. If it weren't for political obstructions, we'd be using vastly improved technology. But it's not just uranium. Thorium is actually a much better fuel from many points of view and probably would have been used as a fuel instead of uranium except that the governments of the world found uranium useful for nuclear weapons as well as nuclear power.
Nuclear power is definitely the answer, but as you point out, it's a question of political problems. Across the resource industry, in fact, it's all politics. When you find a gigantic resource of some type, you can count on lawsuits, not-in-my-backyard opposition and political theft. Those are among the reasons that I don't see the resource industry as a place to make investments. It's only a place where you can speculate.
TGR: So what should long-term investors do to protect themselves?
DC: Because the big problems in the world today all are political, the critical thing is to diversify politically and internationally. You can't have all your assets under the control of one government or in one country. Then, of course, you have to find the right place to put the money within that framework.
TGR: How do you do that?
DC: I can write a book on that.
TGR: Or stage a summit? You have quite a faculty lined up.
DC: It is an impressive group. Actually, this summit has dual overarching purposes. As we've discussed, the massive amounts of money the world's governments have unleashed in their economies have lit a small fire of recovery. We're going to talk a lot about whether the world is truly on a path to recovery or whether investors wouldn't be wise to develop and implement Plan B now, given that the extreme levels of debt that were such a major factor in creating the current crisis have not been reduced. To me, that strongly suggests that this so-called recovery is unsustainable and calls for moving into Plan B. Part of Plan B involves identifying optimal investment strategies for the markets ahead.
TGR: What sorts of takeaways are in store for people who attend?
DC: Let's have David Galland, who's been instrumental in preparing for this summit, respond to that. (A senior market strategist, Galland is managing director of Casey Research LLC, managing editor of The Casey Report, International Speculator, Casey Investment Alert author of Casey's Daily Dispatch.)
David Galland: We expect the takeaways will be good answers to many burning questions. As Doug has suggested, the government says the recovery is real and your broker will tell you it is, yet the underlying data suggests that it may be a paper tiger. So, what's the hard truth? Should you be moving aggressively into rebounding equities? Or is the recovery a mirage that will dissipate in a second crushing leg down for the economy and traditional investment markets? What are the road signs you need to pay close attention to? How can you position your portfolio to do well in either scenario and, most importantly, to hedge against the worst case? Should you worry about inflation or deflation? Neither? Or both? Will the gold and silver you've been holding turn to lead and pull your portfolio down? Or is loading up on corrections still the right thing to do?
TGR: These summits are always sold-out affairs. Is this one full already?
DG: Just a few spots remain as we speak.
Even if you can't make it to the Casey Research Recovery Reality Check Summit April 27-29, you can still listen to every piece of actionable investment advice attendees will hear with the Summit Audio Collection. This expansive audio set will feature every recorded Summit presentation, including those from David Stockman, director of the Office of Management and Budget under President Reagan. . .Harry Dent, author of The Great Crash Ahead. . .Casey Research Chairman Doug Casey. . .and 28 other financial luminaries. Pre-order before the Summit starts and get the entire collection for $100 off.
Want to read more exclusive Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Exclusive Interviews page.
»
- 18040 reads
- Printer-friendly version
- Send to friend
- advertisements -
Hmmm....I may have $80-$100K to preserve in the near future.
Afraid to put it "all-in" anywhere depending upon erratic actions of TPTB (i.e. - may decide to confiscate precious metals or put a 50% tax on transactions, QE7, allowing inflation/stagflation, having it Corzined, 2008 redux in equities, frozen accounts, 40% capital gains taxes, etc., etc.).
Suggestions?
Gee, when I look at a chart, the so called "spectacular" performance of the market over the last 6 months is little more than it working itself out of the trough it was in last summer. Compared to one year ago, the market has barely budged. Take away Apple and its gone no place.
in last 5 years, long term worthless US treasury beat S&P500
Gold beat them all.
in the last 5 weeks we've cleared a million bucks. we're now building a time machine. to go FORWARD in time in case you were wondering. Don't worry..."we'll report back." AFTER..."we do that little thing we do." (Gamble, booze, whore.)
You have the wrong perspective.
Yes, you're afraid to put it all-in anywhere. You want to split it up.
Wrong perspective. Be afraid to put it somewhere all-in from a chronological viewpoint, not an asset allocation viewpoint.
You can put all of it in one place. Just don't expect to be there more than a few weeks or months at a time.
This is the reality that most ZHers are getting wrong. You can't buy Gold or Silver or Stocks or Bonds and sit back. The way this plays out destroys everything, sequentially. Gold may have zero value if no one will sell you food for it, but then a year or two later maybe food returns to the shelves and gold has value again.
Oil may be hugely valuable until economic activity is crushed and there's no demand for it, but then when economic activity tries to rise again, oil becomes vital.
So the play is move around. Don't try to asset allocate. And don't try to get rich. Rather, try to keep moving ahead of the steamroller looking to crush various asset classes one after another. Just figure out how it is driving and move money from in front of it to behind it.
skate to where the puck is going to be, not where it has been.
-Wayne Gretzky-
Unless you are real genius and can ride ahead of the totally erratic wave,
how can you possibly predict all these ups and downs? Proper asset allocation definitely mitigate this problem: you simply have your goods in several different baskets and trade them from the favorable at the moment. I still keep my Palladium in Swiss ETF and pretty sure it will play out some time in 2013 when Russian stockpiles (from Soviet times) finally run out. Just an example how to play this game. Of course, if one allocates in assets with no intrinsic value (like Icelandic bonds in 2007) good luck with the "right wave"...
I really like this time what Doug Casey is saying about nuclear energy (at least he understands what he is talking about) unlike most of the illiterate idiots posting their "articles" over here...
You're already "all in"
A little birdie passed this tid-bit over to me. Since everything is levered to the hilt, this is appropriate for the article.
Enjoy Future Squid
While I agree with most of Casey's points, one obvious piece of nonsense that stood out was (paraphrasing only slightly) .. "in a classical banking system, loans cannot exceed 100% a bank's saving deposits, which excludes checking accounts ". Since the founding of the Bank of England, there has been at least some form of fractional lending, where loans could exceed deposits. Whether it is believed, or liked, among the Zero-herd, money is loaned into existance, even in a "classical" banking system.
He is not considering fractional-reserve banking as part of the classical system, but rather banks that issued notes equal to warehouse receipts. While these institutions did at times succumb to printing more than they had, that falls under fraud, (not fractional-reserve where the extra notes are known to exist).
Fraud meanwhile, was dealt with by the classical bank-run, and subsequent bankruptcy, which kept the system in check.
What you have done is to widen his definition of classical, and used it to attempt to insult the "Zero-herd."
I've seen him speak in person and was a subscriber for a few years, so I'm fairly confident in my assessment of his ideas. Simply put, Doug is one of the most coherent thinkers I've ever encountered personally. My only disagreement with his ideas are related to miners, which I see as being nationalized before ever being allowed to payoff in the fashion he predicts. But even that difference is merely one of opinion.
DC: Unfortunately, they have to second-guess where the money will go. I've always liked resource stocks, especially resource exploration stocks. It's a tiny market. If a fire gets lit under gold and silver, and I think it will, companies in this nanosector could explode 10, 20 or 50 times upward in price. It's happened many times in the past. Right now, these stocks are relatively cheap, so I like that as a speculative vehicle.
Unfortunately, any and everything he spoke of is subject to Nationalization,including these.And what do you get when you invest?, PAPER.
The Euro will crash first, then the USD, and then whats left?.
ANY thing you invest in, will be subject to seizure, or nationaization, and or default.
Sorry, still have to go with 3000yrs+ of history.............seizure can only be done if they can find it.
Black markets are going to spring up all over.Bottom line, there ARE NO safe investments to be had, as long as a .goob is in control.
If you cant eat it, drink it, wear it, ride it,trade it, under these scenarios, we are screwed.
Doug is set(unless his dream developments get seized), a good chance .He's a super wealthy guy and can afford to speculate,and in a big way.A lot here my guess is no way, they cannot.
The essentials of life he really did not address, as they will be sparse and violently protected.
OFF grid as far as humanly possible and lost to most is the only real half way shot at saftey/semi normal life any of us have.If and or when this comes down.
PS: Recovery my rear end.
True, but the loan to savings deposit ratio is not the measure of a liquid banking system. The quality of the loans is the measure. That quality can only be measured against a quality standard, something whose quality does not change through time....
Get long aud everything. I WATCHED RBA bonds all week. The markets sold heavily against the Australian dollar.
"in a classical banking system, loans cannot exceed 100% a bank's saving deposits, which excludes checking accounts ".
_______________________________________
Bringing up the past is quite nice but one has to remember constraints.
Economical times flew slowlier during the sail ages than during the bit era.
How could it be practical today? Values of anything fluctuate way too fast on way too big volumes to be elected as bank's assets and provide the stability you require to warrant a bank does not lend more than its saving deposits.
If a bank customer goes into debt by loaning money from a $100 M capitalized bank, loan period is one month only, too much fluctuation will happen.
Anybody have a problem with Casey's " nuclear power is by far the safest, cleanest and cheapest type of mass power generation available"? Knife throwing is safe, if you don't screw up. But who screws up nowadays?
Notice he said Thorium, and also no political (aka "criminal") involvement. Given those criteria, I believe he's likely correct.
Agreed. No GE no Westinghouse in whatever form they still exist. Westinghouse post WW2 was filled with military inudtsrial complex types.
Casey is a pretty bright guy but some of his stuff I can do without. His group and some fo the other newsletters are pimping rich folk homesetads in some development in northern Argentina. Why you would want to be in Kirschner's police state is beyond me. Other newsletters are better in pointing out that one of the best places is I think Uraguay.
The other thing is Casey's old man made a ton on DC beltway real estate or the growth of govt. Fiat helped make this guy rich.
I prefer Kyle Bass though Kyle has no real advice for the avg Joe when the SHTF except own guns and ammo.
Westinghouse right up to the 80s ran projects for the military, lots of nuke design and components.
Come undone, AC2011, Kyle mentions "productive assets" like oil wells, rent producing real estate, and we know he likes nickels too. He mentions a few other things as well. Kyle rocks!
Unless by the average joe you mean someone who has no investments or investable money at all.
http://www.coultersmithing.com/forums/viewtopic.php?f=51&t=328&sid=a1139...
No GE no Westinghouse in whatever form they still exist
Oh, they both still very much exist, just OVERSEAS.
Ge, We bring good things to Life............just not in Hamerica
Nuclear energy is mentioned 2/3s the way through the interview? The context of the interview was discussing energy as part of a portfolio!
key words: Liquidity,hyperinflation,distortion, QE, China, technology,speculation at the very end.
The general context of the Article was about basic Global Macro introspective.
We could also see deflation in some areas of the economy and inflation in others
The entire world is going BI. Biflation, that is. Everybody will be slowly dragged into the whirpool. The monetary construct of the post-war world, especially as it was conceived since the 1980s is now creating massive imbalances. Make no mistake that deflation and inflation can coexist side-by-side. They're also feeding off each other. And because of this relationship the central bankers are able to point to macro numbers that don't shock either way. That's like being on the rack and having your feet "only" pulled two notches more at the same time as your arms are stretched in the other direction "only" three notches more. :-)
Make no mistake that deflation and inflation can coexist side-by-side
*************
No it can't-how does the money supply increase and decrease at the same time?
If you're talking prices-then sure-some prices go up and others go down and that happens all the time-
Interest rates are low-that doesn't happen in stagflation-
Today's base money patterns say "stagflation" is not happening or about to happen-
http://1.bp.blogspot.com/_nSTO-vZpSgc/SRVLM8Kif0I/AAAAAAAADs8/Ad1Iwf_fPJ...
The concept that "money supply" is the sole determinant of the vector of price is primitive (if we all can even agree what "money supply" really is. Even the Fed has put forth 4 meausres, then retracted one and is in the process of flip-flopping on the definition once again). During the Great Depression, when there was an undisputed deflationary spiral, the money supply was dramatically increased. The deflation trend reversed due to a number of other forces including shifts in supply/demand, technological inputs, demographics, exports, military buildup and most importantly renewed competition and a reinvigorated economy from a massive economic reset (bankruptcy for old, inefficient businesses, major opportunitites for new competitive ones).
And if you needed further proof, look at the situation since 2008: massive, unprecendented increase in money supply. Not much general inflation to show for it.
And if you needed further proof, look at the situation since 2008: massive, unprecendented increase in money supply. Not much general inflation to show for it.
*************
You said inflation and deflation can exist together-they cannot-
Sure we can slip into deflation and then back into inflation like we did-but you can't have both at once-
We are in a credit based fiat system and there is only one money supply with two components-(excluding gold)
Credit and currency and both can exist on a computer and both can vanish-
The actual printed notes cannot deflate-they're always somewhere-
Before putting stock in anything that this incredibly dishonest and/or insane pro-Fed troll has to say, you all might want to read about how JimmyJames tries to claim that not only is the price of oil the same as it was in 2007 (despite being from 40+% to over 60% higher, depending on the source and grade), but how the general price level is completey UNCHANGED in the last five years --- that's right folks, all those rising prices are just a figment of your imagination!
http://www.zerohedge.com/news/risk-hot-inflation#comment-2362088
Also, according to him, the dollar is not only just as strong as it was seven years ago, but it is worth almost EXACTLY the same as it was in 1980 too! (based on the US Dollar Index that he speciously and disingenuously holds up as a measure of the purchasing power of the US dollar, when it is nothing of the sort):
http://www.zerohedge.com/news/risk-hot-inflation#comment-2361892
Oh, and all you high school and university students will be happy to know that you can throw away those history books --- our deflationary sage has pronounced that history is irrelevant!
http://www.zerohedge.com/news/risk-hot-inflation#comment-2359767
I would take anything that jimmyfedtrolljames has to say with a giant boulder, if not a mountain, of salt.
I would take anything that jimmyfedtrolljames has to say with a giant boulder, if not a mountain, of salt.
*************
Well...I've been accused of being a banker here too-so-what the hell-a member of the Fed is maybe a step up in status-
**************
Also, according to him, the dollar is not only just as strong as it was seven years ago, but it is worth almost EXACTLY the same as it was in 1980 too! (based on the US Dollar Index that he speciously and disingenuously holds up as a measure of the purchasing power of the US dollar, when it is nothing of the sort):
*******************
The dollar is trading where it was 7 years ago...no?
http://bit.ly/FPPBLp
Since you cannot interpret two simple charts and the examples i laid our for you--i will get out the crayons and draw a picture for you-
This is a chart of WTI crude...
http://bit.ly/HPp3Ls
the chart above is the $ index..are ya still with me?
In 07 WTI traded at $100/bbl...the dollar was trading at 0.80 the same year-
Today-they are both at those levels no?
Now this is where it will likely get complicated for you-so maybe read this 9 times-
If your wage in 2007 was $100/day...you could buy 1 bbl of WTI/day--no?
Today..if your wage was $100/day..you could buy 1 bbl of WTI/day--no?
Nowhere did i say anything about 1980-and btw..WTI fell to $10/bbl that year-it might fall to 50 or go to 200 this year-but the price of oil today has basically zip to do with the dollar-look at politicians/peak oil/easy credit/china to see the main driver of high prices-
I will say it again-there has never been a "total" world debt based fiat system where currencies float and compete and that's a fact-
btw Ak...ZAP!
.
For the last fucking time, the US Dollar Index is NOT a measure of the absolute value (purchasing power) of the dollar in any way whatsoever, so your argument is specious on the face of it. As I stated in my prior post, by your disingenuous and nonsensical rationale, the US dollar therefore should also be worth today almost exactly the same as it was when the DXY had a similar value to today's back in both 2005 AND 1980, when in actual fact it is today only worth about 25 to 30% of what it was in 1980. So stop throwing in this obfuscation with the US Dollar Index already --- it is meaningless except as a short-term currency trader's tool, as its value is only relative (to other similarly depreciating fiat currencies), NOT absolute.
Comparing US Dollar Index values from one year to the next is to compare apples to oranges --- comparing its values from one DECADE to another is like comparing apples to toasters!
No it did NOT, as I already demonstrated and proved to you, yet you continue to egregiously repeat that same lie over and over.
Not only did WTI oil NEVER even reach the $100 mark in 2007 (as your own chart shows), its average price was $72 during the course of that year, as compared to over $100 this year so far --- so are you still going to try to claim that petroleum is at the same price as five years ago? And if we look at Brent crude (http://www.indexmundi.com/commodities/?commodity=crude-oil-brent&months=120), which is the MUCH more meaningful benchmark, the difference between its price in 2007 vs. 2012 is even greater. Your own chart clearly shows the average price trend of WTI rising from 2007 to today, minus the spike and sharp decline in late 2008-early 2009 (I guess you overlooked the big blue rising arrow, LOL), so clearly it is YOU who cannot read a price chart.
True, and yet irrelevant. Fiat currencies crash due to governmental profligacy regardless of the fiscal situation of other governments; the fact that other governments are equally sinking into debt and destroying the value of their fiat currencies has nothing to do with the fact that ours is doing the same as well, nor is the fact that ALL governments are debasing their currencies somehow magically going to save one or all of them. Are you in any way shielded by an impending bankruptcy merely because your neighbor is facing bankruptcy as well? You are just waving your arms around and invoking magic here, not historical precedent (nor common sense). But that's right, you don't BELIEVE in history anyway.
Oh, and by the way, how about that all-commodities index (http://www.indexmundi.com/commodities/?commodity=commodity-price-index&m...) that I provided in my post in the other thread, which is up over 60% between March of 2007 and March of 2012? Just go ahead and try to explain THAT with all your obfuscatory blather about the US Dollar Index, LOL!
And you STILL fail to address virtually ALL of the other data that I provided which blows your absurd and insulting "no rising prices in the last decade" argument totally out of the water, so what do you do in response? Fling out even MORE lies and distraction! Your attempts to evade the damning arguments and data that I have provided in response to your many lies and idiotic denials of reality are infuriating, but very revealing.
You are probably the most dishonest, and certainly the most idiotic, most clueless, most disingenuous troll that I have ever encountered. One has to wonder what you think you are accomplishing here by spreading such obviously untruthful disinformation and absurd assertions that are contrary to all the facts. Regardless, my contempt for you could not be greater.
The dollar is trading where it was 7 years ago...no?
For the last fucking time, the US Dollar Index is NOT a measure of the absolute value (purchasing power)
***********
The board idiot who confuses everything in order to make himself look like he has a clue-so "was" the $ trading at .80 in 07 or not?
Did oil trade at 100 in 07 or not?
And as far as your stupid yearly averaging goes--what if oil crashed here and traded at $30 for the rest of the year??
What would you come up with for an excuse to promote you ridiculous rants of eminent hyper-inflation then?
*************
Oh, and by the way, how about that all-commodities index
*************
Looked at it AK and i'll be damned--today-we're right at the same level as 07 and it could fall much lower for the rest of the year--then what?-i think you shot yourself in the foot-
Your loud and obnoxious and you skew what's being pointed out to you to hide your lack of knowledge-
Here's another index that shows we really haven't gone far with "prices" dating back--
http://bit.ly/JbRMOt
Yeah, we REALLY believe the bogus and manipulated CPI figures issued by the BLS! Why don't you try selling us the Brooklyn Bridge and some oceanfront property in Arizona while you're at it?
Get out of here with this childishly insulting shit --- nobody is buying it at all.
.
Psychological transference --- so sad to see.
What is your fucking point about bringing up the meaningless US Dollar Index in a discussion about the depreciation of the US dollar and rising prices? The DXY DOES NOT MEASURE THE PURCHASING POWER OF THE US DOLLAR!!! It would make as much sense in this context to try to relate the orbital dynamics of the planet Neptune to the general price level. I mean, DAMN, you are an idiot!
If at first your lies do not succeed, try, try again, eh?
NO, for the last damned time, you terminally slow and brain-addled troll, it did NOT!! Your OWN FUCKING CHART clearly demonstrates that oil NEVER touched $100 in 2007 --- and averaged in the low $70s in that year! What the Hell is your damage, fool?
And what if oil continues to rise and reaches $200 a barrel this year? And what if monkeys suddenly flew out of my ass? Pointless to bring up in a comparison of oil prices over time TO DATE, as it has not happened. This is just more attempted distraction and obfuscation from the troll who excels at both.
The concept of logical debate really eludes you, doesn't it? I guess making a direct, equivalent and meaningful comparison of two datum from two different years, which would make complete sense and be perfectly logical to anyone else, somehow constitutes "stupid" in your book. But coming from a guy who has blithely declared history to be "irrelevant", I guess such a statement should not be too surprising.
Holy Shit, does your blatant and ridiculous lying know any limits whatsoever? NO, last month we were over 60% HIGHER on that all-commodities index than were five years ago last month; March 2007 = 122.57, March 2012 = 201.48, change = + 64.4% (http://www.indexmundi.com/commodities/?commodity=commodity-price-index&m...). The clearly-rising price trend on the chart over the past decade is clear and undeniable, as well, just as it is on the oil price chart that YOU supplied yourself in the post above. But I guess basic mathematical skills, like logic, are not part of your repetoire.
Face it, asswipe, your every laughable argument has been blown out of the water here, and not just once but multiple times, so what do you really think you are accomplishing by compounding your lies and digging the hole of your noncredibility even deeper, except to make even more of a fool of yourself than you already have?
When it comes to rational debate, you bring a squirt gun to a knife fight.
I brought up the $ index because you keep foaming at the mouth that it's because of the $ CRASHING that's driving prices and i proved to you it is not-
Wonder what you said in 08 when "PRICES" collapsed?
Did you scream "the dollar is getting stronger"??
You didn't address the case shiller CPI-because it proves you wrong-
Quibble about $5 price differential-man you are one dumb fuck and I;m gonna boot your loud ass around every chance i get-
.
You are so full of shit your eyes are turning brown. And once again, as always, you proved nothing at all, except that you are a total idiot.
The US Dollar Index has NOTHING to do with the value or purchasing power of the US dollar --- because the US Dollar Index is NOT the US dollar! It is merely an artificial and contrived currency daytrader's tool, whose values from one year to the next are NOT comparable to each other due to the steady and ONGOING depreciation of the US dollar (and the ongoing depreciation of every other world fiat currency, which is to say all of them). Even trying to make such a specious argument just goes further to demonstrate what a dishonest and obtuse troll you truly are.
And what the fuck are you even talking about, "$5 price differential"?
It is beyond obvious that you have absolutely NO skills in logical debate at all, so if you want to salvage what shreds of credibility you might still have left here (which I would argue are none at all), or any remaining traces of self-respect, I suggest you refrain from pointlessly and foolishly continuing your irrational attempts to convince us that the dollar is just as strong as it was five or seven or 32 years ago --- you would have better luck convincing us that up is down and black is white. Your wholesale denial of reality is deeply disturbing, and disturbed.
After having EVERY ONE of your laughable and absurd arguments utterly destroyed, you can only come back with more evasion, distraction and gibbering nonsense. Everyone here can now see you for the ridiculous, idiotic fool and troll that you are.
It's where the river flows
Make no mistake that deflation and inflation can coexist side-by-side
*************
It's called stagflation, last seen during the Carter administration.
Not related to story, just getting the word out...
BREAKING: Bank of America Reportedly Drops Gun Company for Political Reasonshttp://pjmedia.com/blog/breaking-bank-of-america-reportedly-drops-gun-co...
Not related to story, just getting the word out...
This is why eBay & PayPal should be avoided and never used by any American that believes in the right to Keep & Bear Arms.
BAC has Obie's Dick up their ass, and they like it!
Crap, I read the whole thing and it concludes with trying to sell me something for only $295!. I hate that, makes me feel used.
That's why I always read the first and last paragraphs first. See what you're getting yourself into, more propaganda
I got sucked into the whole damned thing. I had some free time to lay off the speed reading!
Next time I'll go ( hop-skip-jump) and figure it out!
I love it when I hear "it's all gonna come crashing down, it's just a question of when". I wish I had a dime for every time I've heard that. "When" is a pretty big question. Getting the "when" wrong makes you broke.
'Resource stocks will go up 10, 20, 50 times" but only the ones he picks out of the thousands out there. Nice play to our greed. Apparently I've just been picking the wrong resource stocks for the last 7 years because those pigs have done nothing but act as a sinkhole for my money.
Physical gold and silver are the only things that have worked consistently. Listening to "it's all gonna come crashing down" has kept me in shitty resource stocks and out of real winners like AAPL, PCLN, CMG, IBM etc. Hey look NEM is at $47 with gold at $1640. Unfortunately it hit $60 in 2005 when gold was at $600. Yeah these resource stocks are the way to go. Pathetic.
Look at how many charts a day Zero Hedge posts. They post them for a reason. Watch them. Things that are working for me are stocks that fit in with the modern day end of the Roman Empire. Las Vegas Sands, Altria, McDonalds, and Inbev. I've dabbled in PCLN and AAPL but am not able to sit through a long term hold on real strong momentum stocks.
Look at the list though. All are companies that people use when they say "Ah, fuck it." Your want ahfuckit stocks, not resource stocks. Resource would impy a true recovery which there is not. We just have people maxing out credit and saying fuck it. Speaking of check out Mastercard.
Like your strategy. Many people I know are in that denial stage. But after Ahfuckit comes Ohshit, when people will be facing reality. Most Ohshit resources are not publicly traded. I will actually feel some relief when more of my friends hit the panic button instead of working on their physiques, kid's soccer career, etc.
Yeah, I am a bit nervous with these stocks up here but the best ones still have good moving average and trendline support beneath them. I like the 400 day simple average. For a simple trend strategy I buy 200 day breakouts and sell 400 day breakdowns. I use other tools but at the core thats my strategy. I am also really nervous that absolutley nothing (copper, t-bonds, foreign stocks) is confirming the strength in the US.
Oh well, I have some physical myself and stop losses on the stocks. What else can I do?
i do agree..."gold mining stocks suck." not that they haven't been pulling gold out of the ground by the multiple ton over that time frame. hmmm. what are they spending their money on? (see "booze, gambling and whore" comment above.)
That was a good comment D/A/V . Trading isn't running an auction house! Input costs and market fluctuations do matter!
Have owned Newmont for a while. When I saw they were buying an "American Chopper" from either pathetic Pauly Sr. or pathetic Pauly Jr., I found the reason why the miners generally suck versus the phyzz. Time to hit the exits on NEM.
Casey is always out selling mining stocks.
Trade the noise and book profits to phys.
Good idea. If I pull an upside on the mining paper (all Ag), it is headed for physical.
I think I'll let the arms stock alone for a while. We have the best salesman in the world right now.
The only thing retaining value in my stash o' stuff is the PMs and mining stocks (more or less). They are volatile, but still (I think) worth holding. I diversified them in countries with (relatively) stable gubbermints.
However, my weapons stocks are doing fine.
Could have been a very interesting article as while mass production is waving goodbye, speculation is destined to come back full force.
Yet one line spoils it all: the usual US citizen meme. You can produce more than you consume.
Exhibiting a pattern of thought that is at the root of the current situation: the infinite growth thingie.
Prudent or not, US citizen middle class is the drag.US middle class aggregate demand is the driving force behind the excessive consumption schemes.
The car civilization is typically a product of the US citizen middle class societies.
And the rabbit-breeding authoritarian civilization, sweatshop suicides, murder via mandatory organ "donation", Tibetan genocide, ubiquitous copyright violation and intellectual piracy, puppy McNuggets, roadside shitting and public spitting are typically the product of the antheap-like running dog imperialist Chinese citizenism citizen society, whose nose-picking, blobbing-up nature is eternal.
Make me laugh!
AnAnonymous said:
Nothing new here being pointed out. The fallacy of infinite growth has been pointed out here many times in the past by non-US-citizenism US citizens.
You are following the Chinese citizenism path of plagiarism, with repeation of ideas from others and claiming them as original thought by your own.
Typical typicality of Chinese citizenism eternal nature down through the ages.
Chinese citizenism citizen narrative. Always imitating, always copyright violating.
Bonus photo of AnAnonymous practicing the spread of US citizenism:
http://27.media.tumblr.com/tumblr_lp20icnRMa1r0yesao1_500.jpg
Stocking up on canned cherries.
Lots of speculation of what comes next. I find following the major market indexes helps give me an idea about where my investments are headed.
http://bullandbearmash.com/index/nasdaq/hourly/
I am so glad to know that Japan survived "Fukushima survived one of the most severe earthquakes in recorded history with no problem"
This statement alone puts into doubt everything that he said earlier on. What an ignorant self-imporant wanker!
http://enenews.com
http://www.beautifulkids.com.au
I am so glad to know that Japan survived "Fukushima survived one of the most severe earthquakes in recorded history with no problem"
Just like the MSM, read it ALL, that is not all he said.
Sound bites suck.
Problem w/ Casey is he speaks only to the really monied investors.
Philo: Hello, my name is Philo and welcome to Secrets of the Universe. Today we are going to learn how to make plutonium from common household items.
"The problem is that many prudent middle class people are going to be wiped out." - Those that borrowed to 'keep up with the Jones' will be crucified on the cross of high interest rates (on their debts), but equating this to the 'middle class' is erroneous, it's quite simply everyone as wage increases over the past 20 years have been replaced by ever easier credit.
This guy is just repeating whatever will get him headlines.