Some of you fuckers are hypnotized into believing we are entering a period of rapid inflation. This theory supports your view, wrongly, that equities should trade higher for as long as we shall live. Nothing could be further from the truth. This morning the Swiss National Bank warned of potential deflation risks in 2011. But we already knew that. Why else would yields be so low? With every central bank trying to devalue its currency, it’s not a surprise to see gold trade at new highs. I am not a big believer in “smart money.” As a matter of fact, I believe, in many cases, the bigger your money pool is, the dumber it gets. Having said that, gold is a massive bubble that will continue to inflate until one day people realize they can’t buy sawed off shot guns with yellow coins. The commodity and the underlying stocks are both exhibiting classic signs of a bubble, all the way down the food chain to market participants. Basically, investors of gold, similar to dot com players in 2000, feel we are in a “new economy” and owning gold is the “place to be.”
Been there, done that.
Today’s economic numbers were not eventful and the futures look bad. We should trade lower today. However, ahead of quadruple witching and with investor sentiment catatonically bullish, I would not be surprised to see more of the same.
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I bet the day gold falls apart will be the same day the dollar is destroyed. Therefore, there will be no way to buy that sawed off shotgun, other than with food, or another gun.
Wrong. Gold is money, plain and simple. Gold is not in a bubble, its price is merely reflecting a rational response to currency devaluation.
Apparently, no amount of evidence is enough to convince the Fly of this fact. He will, someday, rattle hold coins in his hand, fully bearded.
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Yes, you are correct. Gold is not in a bubble. But can you honestly say that you aren’t?
I am in a bubble of common sense, historical analysis and basic economics, apparently.
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we are going to experience inflation… don’t look at rates as the government has alterior motives for low rates than to fight “deflation”….low rates=cheaper mortgages AND higher house prices….not to mention that banks, fannie, freddie, ginnie mae etc all are dependant upon low rates to “suck the governments tit” as you say so comically (and truthfully)…… but lower/higher CPI is just a result of inflation/deflation, not what it actually is….inflation is actually just the expansion of the money supply, which as u know, is rapid…moreover, the CPI is manipulated by the government to report what it wants to report (inclusion/exclusion of gas/food prices, etc)……..
rates being low is exacerbating the problem, as it only expands the money supply more..however the government has boxed itself in with regard to its policy tools, and cannot raise them…. do u see oil? do u see precious metals? are u going to whole foods and spending $500 a trip still? for sure, i know that i am spending more everytime i go. just the other day there was a sign on the door bringing notice to customers of raised prices “due to the economy”…that is not deflationary….
with that said, short equities and long precious metals (long term) as macroeconomic trends still have not changed..the people who created the problem and didn’t see it coming are still in charge…
short and medium term, Fly & PPT FTW
“higher prices at whole foods because of the economy” if your dumb enough to believe that you are getting high quality clean foods that are organic,then you deserve to be a cha-drull for thinking that the price justifies what you buy………..i have sooooo many friends that own restaruants,and some who own long long time produce markets.and one who owns a meat packing plant with 28 trucks…….if you think that you eat better from a whole foods because the price is high,lol, everyone of youz is nuts………….especially the part about inflation. 2 yrs ago a sheet of drywall cost me 10 bucks a throw,last week i paid 4.25 a throw @ HD.things will stay deflated as long as china produces it. and along for the ride way way down,ie; namely, homes,jobs, and the most important that “NOONE” will speak of freely,is the destruction of said incomes of all in this country. the market has been ‘SCREAMING’ this since march 07. there was a reason behind the deliberate housing bubble pop.
I dunno about now, next week, or next year, but there is NO WAY we can avoid fairly strong future inflation with all the money printing and related implications in the last 24 months. NO WAY. Let me know if you want to hire me for your blog.
if/when things get better.the velocity of money will change, because if you think more money being printed will cause inflation, all Ben has to do is destroy as many greenbacks as it takes to even it out.to have the fed,or any government agency try to inflate anything,i would bet the farm,that you will see rioting in the streets.and if you look around,in certain places, as a consumer,inflation has already been here. and the dumbest thing that people believe,they think a fallen economy is the best excuse for jacking up any price….but dumb asses sure do believe it.
The money that is being printed is not getting into the system, as banks are hording cash.
yes, and the money WILL NEVER get into the system. I agree with you.
Makes perfect sense.
The goal of the United Nations (Agenda 21) is to effectively dismantle the US (and European) economy for the purpose of spreading our wealth internationally, which will create a more stable world, politically, for the international central banking oligarchy to control in the aftermath. They already control the world economy. All they are doing is changing the other systems that revolve around this, so that things are more efficient to run, which is painful for little people like you and me.
you need a reality lesson,not a history lesson. you cant have people in the u.s. making 75k a yr with no job to speak of,while asia does the same gig for 3k a yr.THIS IS THE PROBLEM THAT EVERYONE HAS IN THIER THINKING. THIS COUNTRY NEEDS TO TAKE ITS MONEY BACK FROM CHINA.and i’m not talking about stupid treasuries.
There will be a deep correction in gold soon and the sign to watch (hasn’t failed since ’79-80) is when gold spikes up (usually a gap up at the open) and the gold stocks start going down as gold climbs.
That would be the big boyz getting ready to sell gold or short the futures.
Imo the whole gold bull won’t be dead until a series of spikes up keep going day after day and your Aunt and Uncle start to buy gold.
Gold and silver will be dead when carbon credits are used to back the new world currency of the IMF World Treasury. When you see this news in the Asian headlines, that’s when to sell your precious metals.
bullshit
My uncle Bill, and his wife aunt Helen just told me to buy all the gold I can!
And I bet those grapes were sour too!
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additionally, think about how many dollars are sitting abroad…..the government is relying on china and japan and eurozone to keep buying our debt…to keep the demand for the dollar high…but as our government continues to debase the dollar, do u think they are going to want them? no..and what are they going to do with them…do u think they’ll bring them here? that is when you’ll really start to see higher prices…
yes, fly u are right, there is a lot of money “on the shelf”….however it is still there, ready to drive prices up at a moments notice…certainly there can be deflation before inflation..however the end result of printing and putting all this money into the system is inflation
Chivo, your conclusions do not work in fiat money system. In fact the Fed’s QE is deflationary.
What they did with the banks was to increase the reserves in exchange for their interest-bearing assets. So, those assets are taken away from the system, and the banks received the right to increase the credit. But in no sense does it MEAN that they WILL increase it. That totally depends on the demand for credit.
Now that demand for credit should come from public and/or from corporations. We know that the private sector is indebted and so those who already have debt, normally try to pay it back, which is deflationary. And those, who, maybe would like to buy a new house, will think twice whether to wait a little bit more till housing prices go down even more. After all doesn’t supply exceed the demand?
As for the corps, well, you know it that their hoard cash. Why would they need credit? Only to do something like MSFT did. But boy that’s not even close to investment! It only serves to reallocate wealth. There’s nothing in such actions what would stimulate demand and, thus, increase real GDP.
Inflation would actually be good, for it would mean that the demand for real goods and services outpaces supply. Money supply has nothing to do with it in the fiat system, because quantity of money always corresponds to the level of economic activity via credit creation by the banking system. And we also know that they do everything, but NOT create additional credit. The existing situation is and will remain deflationary as long as the aggregate demand is insufficient due to private sector’s deleveraging.
Keep hearing new commercials about why you should have gold in your portfolio and how you can turn your “paper” 401K into a solid gold portfolio…their trying to draw in the individual investor now. We are not there yet in my opinion as not every Joe Smoe is in yet. Once you start hearing everyone at work talking about how they own gold and its made them so much money look out!
Chivo
Japan?
Looks like they will be handing out 40 points again today. I wonder if they will give out 40 points daily all the way through November?
This is comical. Everything I own, long or short, is down. Fucking snake eyes.
I had that “flu” yesterday. “Hedged” but everything went down. I don’t complain because who would listen. Besides it will all work out in the end. As someone here said earlier, this is one tough market.
yeah im ok with it…my wounds are minimal at the moment.
TLT kinda pissing me off tho
I told your mothers and they said you shouldn’t worry, that they support you emotionally through tough times like these.
Fly
What are u referring to with Japan?
Funny thing is, Japan when it entered it’s lost decade, or two, or whatever,,,it was/is a healthy economy…it had a CA Surplus…it had savings…it borrowed from within..it financed its own expanding money supply
the USA isn’t..it is relying on China and Japan to keep giving us money to buy their goods (because we dont competitive produce anything)….and relying on China & Japan & even more PRINTING PRESSES to fund bailouts and government spending, etc…
glaring differences!
We now have positive savings rate and our debt will be financed internally. Wait and see.
LOL what are people going to save? Our unemployment is at 10% And that is only U3!!!!
And our debt financed internally? With what? are government’s going to cut their spending or raise taxes?? LOL!!! it’s all bout getting reelected fly!
Take a look at the dollar…….dollar goes down because of less demand or more supply..neither are deflationary!
Oh, let’s not be silly. There is plenty of money in this country. Don’t act like we can’t finance things. Hell, all you need is a little incentive and people will plow into Treasuries.
Plus anyway, the Fed is monetizing the debt right now!! Who needs China when we can simply play ponzi scheme right here? I just don’t see how inflation will increase while all of the money that is being created is being tossed into a black hole.
I certainly do enjoy your commentary though.
Off for a walk.
Wait…Fly, are u saying u expect people to give our government money to get 3.5% or 4% in 30 years, or whatever the rate is? that is a HORRIBLE deal…additionally, confidence is low and dropping….the belief that the government is going to fix this thing is failing…unemployment is still high, and even by our gubmint talking heads, it isn’t going down “anytime soon” or whatever they say..no one wants to give the government money
…in fact, the only “people” giving us money still is the foreign gubmints that have been for a while….but how long will they give us money as our gubmint continues to DEVALUE the money they are collecting!!!????
Moreover, u can’t just say, generally, that “our country” has plenty of money…our middle class and lower class is broke..BROKE….CC Debt is at all time highs (talking decades) and defaults on CC’s are at all time highs (talking years)….sure, the upper upper class has money….and yes, they save it..but our government says that is bad! instead, they’d like to raise taxes on them and lower them on the middle/lower class who will SPEND IT…LOL!!!!!!! so backwards!!!!!!
with regard to monetizing debt…if we print the money we need to pay our debts, then we won’t just experience the inflation that is looming, but rather hyperinflation..u cannot just print money when it is supposed to have “intrinsic value”…..the dollar used to be tied to gold, which disallowed endless prining…but nixon nixed that and now we can print and print and print….but, oh, wait….nobody wants worthless paper…..
Apparently in Japan, savings returns are not taxed (according to Bloomberg). If that were to happen here you would see instant growth in the savings rate. We certainly could self fund if that were the case.
u mean like IRAs? LOL
No all savings.
IRA’s are a very limited vehicle. Making all savings tax free would be HUGE.
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that is why gold will go to 2k.because it shows the value of money right now, paper, it’s worthless as shit on rye.but in gold,the #’s dont lie,cause if paper money reflected gold right now, welfare recipients would be rich.
You are confusing inflation and hyperinflation. You may be right about inflation but hyperinflation is a different animal with similar symptoms. Lost confidence in the currency will bring about skyrocketing prices with no additional velocity. Then you’ll see tremendous velocity as people try to get rid of their dollars.
Gold and silver will always have intrinsic value as metals because of their scarcity (particularly silver) and their unique physical properties,
Ever wonder why so many primitive civilizations throughout history horded these metals without any outside influence telling them to do so? The metal gold is extremely malleable (the extent to which a material can undergo deformation in compression before failure). Gold is also ductile (degree of extension which takes place before failure of a material in tension) and one ounce can be drawn into 80 km (50 miles) of thin gold wire (5 microns diameter) to make electrical contacts and bonding wire. Silver is the greatest electrical conductor, better even than gold.
Thousands of years and the historical test within the human realm is the value-add that precious metals have, that fiat currencies do not possess.
“Gold is valuable & portable because it’s rare & not easily counterfeited. Gold is fungible & exchangeable because every bit of .999 fine gold is similar enough to be like another. Gold does not rust as it’s imperishable. These properties make gold a good store of value, a medium of exchange, and a unit of account. But silver has nearly all the same properties, with a few minor exceptions. Silver is more rare than gold. There is about seven times as much gold in the world as silver. In the ground, gold is more rare than silver.”
Can we also add in that a gold backed currency or even gold as a currency is feasible now? With the advent of credit and debit cards, one can pay with gold without having it on their person.
Give everyone a “gold” account. Then give everyone a debit card.
Unfortunately, it looks as though the IMF’s global currency — no matter if this turns out to be a currency basket of SDRs (Special Drawing Rights) or not — will be based on an underlying fiat commodity that can be mroe easily controlled by the financial oligarchy, unlike precious metals, which the central banks may only control through hording.
This new fiat commodity is already being actively traded globally in accordance with the Kyoto Protocol. The US is working hard to enter this global trading space by working around the Kyoto Protocol, which it is not a member of. The workaround is Cap and Trade, which is now being implented at the State level, instead of the Federal level, which is why you are not hearing much about this in the news lately.
The new fiat commodity is CARBON CREDITS, which may be created out of thin are by the banking oligarchy. Also known as carbon offsets, or “Carbon Financial Instruments” or CFIs.
If you want to own CFIs you need special licenses in order to be qualified.
In a nutshell… only our owners will be able to own precious metals and horde them, since it represents the real wealth of the planet. Nothing can diminish that these metals have valuable intrinsic properties.
The rest of us will be required to build our wealth based on fiat commodities such as carbon credits, which will effectively mean no one of peon status will EVER be allowed to be self-elevated through personal wealth, to central banker status (kind of like how George Soros broke the Bank of England and now he co-owns Cede & Co., which is the DTC — a branch of the Federal Reserve).
Precious metals will be illegal for the peons to possess and transact with. It will be useless to us in our controlled little world.
However, if you are smart, you will see this coming and situate yourself to profit from a world dominated by carbon credits. Your fellow peons are well behind the learning curve, so much so that you should easily be able to position yourself as a God amongst the sheep, in future years.
I educate you to share the wealth with you! Now go celebrate!
Or you could just leave America
I already have my place in Latin America (Costa Rica), now looking into Asia.
A worthwhile and commendable plan, assuming you can afford the carbon credits to travel back and forth between Asia and your family back home. Your carbon credits allowance will be diminished over time, as well — for the sake of the planet’s health.
“Nothing can diminish that these metals have valuable intrinsic properties.”
Em… except those that currently perceive that it has valuable intrinsic properties?
I don’t think we disagree, I simply believe there will be a growing rift between the ‘valuers of gold’ and the “non-valuers”. (… phew, that’s almost as bad as ‘decider’).
In the end, gold will be seen (again) for what it is; mostly symbolic, but with some very useful intrinsic properties.
jake,you changed your name.
Which one of the above was supposed to be “jake?”
Not that History kook. The Puppetmaster thing is Fly’s bag, not mine.
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Go back further ( in history ). Why did gold become so highly valued? Because it held the essence of the sun god? Go back further.
You’ve been watching too much “Zeitgeist” bullshit. Concentrate on “carbon credits” instead.
Oh contraire, monsieur. Gold originally gained it’s clout because it symbolizes something. That ‘something’ was a precious commodity. Those that possessed it had great power over others, a power given willingly if not freely by the recipients.
However, I do agree that carbon credits are inevitable, as it is the only way (to date) to truly assess the cost of any goods.
Going to be a scalping SMH long day.
SMH
I feel we are in no-mans-land here. A lot of people are “waiting and wanting” the market to go down, the rest want it to continue higher. It is normally when no one is expecting the market to dive when it actually does, instead of when 50% of all players are waiting for it….. the air is foggy right now.
I went down to the CVS today with my numismatics SLV coins and bought some VXX to rub on my chest.
Oh yea…I picked up some AMED while I was there too.. Breaking out of a 6 month down trend. Fundies are strong but the gumment wants to stick home health in the eye for medicare fraud so be careful with this one.
Where’s my DOW 9000 hat?
Your buddy HAL took a shit in it.
Bot GME Sept $20 puts with the stock at $20.05 like a crazy person.
USA obesity part II
http://www.fieldandstream.com/blogs/hunting/2010/09/texas-chef-successfully-deep-friesbeer
As the boomers age and if investment risk increases in conjunction with property values remaining distressed, we could exhibit Japan like activity in the government securities market as UST would be the safest option to protect large assets and provide predictable income. There are many factors in the economy and globally that you cannot make an apples to apples comparison between the US and Japan.
I’d like to point out the current activity in Fed MBS holdings though, as the action is interesting. The Fed is dealing with a deluge of prepayments on mortgages due to increased savings rates and mortgage refis. This was unexpected by the Federal Reserve and shows that homeowners have excess cash but do not want to spend/invest it and would rather pay down debt.
Maybe the Treasury should just offer tax credits for babies as that would revitalize our aging society and allow us to extend credit via no interest credit cards to those right out of the canal.
Fly if gold is in a bubble, then isn’t coffee, sugar, rubber, and gay bearish websites?
” I am not a big believer in “smart money.”
I agree. e.g. : Swiss National Bank
dot com players in 2000? The general public does not own gold or silver.
We can probably agree, what’s going on today is not sustainable.
Politicians worldwide will not cut net spending.
In Weimar, they went from virtually no inflation to hyperinflation in 2 fucking weeks; unimaginable, no?