GOLD

[InternationalRockSuperstar]

Is gold in a bubble? Yes but everything is in the same bubble.

 

how can everything be in a bubble?

 

in a bubble relative to what?

 

We are in a recovery

 

 

Given such a background it is hard to see how inflation is going to take off...

 

it already is.

[zebbedee]

I have not seen this posted here. Tescos are doing cash4gold

 

https://www.tescogoldexchange.com/

Thats actually not bad for a supermarket, they're offering about £25 under spot

[aliveandkicking]

it already is.

 

So you keep saying. Apparently hyperinflation will arrive by June 2008

[carbon junkie]

So you keep saying. Apparently hyperinflation will arrive by June 2008

The money supply (inflation therof) has increased deramatically. Prices though which I think is where you get confused will always and have always lagged a growth in the money supply - inflation.

 

Show me one instance where a dramatic increase in the money supply has created an instantaneous increase in prices - don't bother because it has never happened it never will as it takes time.

 

Deflationists still barking up the wrong tree and always wanting instant gratification with respect to prices.

[aliveandkicking]

The money supply (inflation therof) has increased deramatically. Prices though which I think is where you get confused will always and have always lagged a growth in the money supply - inflation.

 

Show me one instance where a dramatic increase in the money supply has created an instantaneous increase in prices - don't bother because it has never happened it never will as it takes time.

 

Deflationists still barking up the wrong tree and always wanting instant gratification with respect to prices.

 

I am in inflationist. You are the one wanting instant gratification and your Austrian definition of inflation is just part of that. Apparently doom is inevitable because boom must turn to bust.

 

You guys also muddle up the meaning of money supply. Bank deposits at the central bank are not part of the money supply that sloshes around to form money in ordinary peoples possession.

 

But in all cases where governments have printed up the notes in peoples possession i think we can be reasonably confidant that prices rose almost immediately.

 

Your supposed certain doom and your hyperinflation is not going to explode out of nowhere. You are just going to carry on being wrong until you realise that. If all gold buyers were counting on doom at any moment we can reason the gold price is not going to go anywhere fast for a while to come - particularly while interest rates are beginning to rise all around the world.

[carbon junkie]

I am in inflationist.

When did you take the road to Damascus?

 

Should I call you Saul or Paul?

[aliveandkicking]

When did you take the road to Damascus?

 

Should I call you Saul or Paul?

 

It was always my road. You guys just like to ridicule anybody who dares interfer with your fantasies of instant gratification and certain doom to your advantage.

[carbon junkie]

It was always my road. You guys just like to ridicule anybody who dares interfer with your fantasies of instant gratification and certain doom to your advantage.

If it talks like a deflationista and walks like a deflationists then it probably is a deflationista.

 

Having read your replies I noticed the doom gloom fantasy hyper comments (very unhelpful unless you want to have an argument rather than a debate) and noticed you clearly have no idea of my standpoint as you always spend too much time arguing with so many here and too little time learning - twas ever thus.

 

Cheers Paul we will leave it there.

 

edited

[aliveandkicking]

If it talks like a deflationista and walks like a deflationists then it probably is a deflationista.

 

Having read your replies I noticed the doom gloom fantasy hyper comments (very unhelpful unless you want to have an argument rather than a debate) and noticed you clearly have no idea of my standpoint as you always spend too much time arguing with so many here and too little time learning - twas ever thus.

 

Cheers Paul we will leave it there.

 

edited

 

What you mean is unless people agree with you then they are totally ignorant. You might as well bury your head in the sand for all you can learn with that kind of narrow minded attitude to learning.

 

There is evidently a widespread stupidity on this board that if you are not a hyperinflationista then you are a deflationista. Intelligent discussion is therefore rendered impossible due to the never ending toxic approach taken towards anybody who dares disagree with the required belief system.

 

 

[InternationalRockSuperstar]

So you keep saying. Apparently hyperinflation will arrive by June 2008

 

hyperinflation (of USD) started in July 2009.

 

http://www.chrismartenson.com/blog/fed-buy...y-auction/23880

 

I'd guess currency repudiation by July 2012.

[Barry Scott]

I've advised a friend to buy e-physical at this point.

 

Thanks Warpig. Assume your talking Bullionvault or GM?

I have a GM account. Can't say I'm enjoying seeing the ammount of goldgrams dwindling every time they take a bit for storage. Regardless of premiums, holding real physical is looking more attractive to me.

 

B

[warpig]

Maybe we should introduce a new term "nominal austerity"... In any case, inflation/deflation is largely irrelevant when we're discussing the price of gold, gold will rise in real terms if for no other reason, than as a safe haven. The 2008 panic caused all leveraged assets to sell off, I am certain this will be less pronounced should such a shock hit the system again. The stage is set, we're just waiting for the final act.

 

In our money system prices are always in a bubble that is further inflated by adding extra money. Therefore you would expect prices of all things to rise as the bubble is made bigger. Is gold in a bubble? Yes but everything is in the same bubble.

 

We are in a recovery but we are on life support also.

 

The debt explosion you talk about is a deflationary collapse. Look at lehmans to see what happens when people lose confidance in our credit system and you see that gold and silver plunged as did the price of just about everything.

 

Central banks cannot run out of money, they are not audited and we only get to read what they tell us.

 

I dont think austerity is going to go away. There is a huge problem of excessive system leverage that can only be solved by people being poorer. And so we see the Baltic dry at 2002 prices not necessarily because of a collapse in world trade but because of a bubble in shipping that enabled a bubble in ship builders wages and their houses and their savings. All things were in a bubble and even if the bubble is kept inflated the underlying problem of excessive leverage will take years and years to be resolved so that current system is safe and self sustaining and off life support.

 

Given such a background it is hard to see how inflation is going to take off because if inflation were to dramatically rise then the wages of the shipbuilders would rise as would the farmers wages as would the builders wages and landlords etc and for many the crisis would be over, and that is just too easy. People are instead going to struggle.

[warpig]

No worries and yes he's gone with GM. I know what you mean, the storage fees aren't cheap. I don't have any e-gold any more, I swapped over to CGT free physical some time ago, I just use GM for silver. If you decide to buy physical, remember you can negotiate a discount for bulk buys!

 

Thanks Warpig. Assume your talking Bullionvault or GM?

I have a GM account. Can't say I'm enjoying seeing the ammount of goldgrams dwindling every time they take a bit for storage. Regardless of premiums, holding real physical is looking more attractive to me.

 

B

 

[aliveandkicking]

Maybe we should introduce a new term "nominal austerity"... In any case, inflation/deflation is largely irrelevant when we're discussing the price of gold, gold will rise in real terms if for no other reason, than as a safe haven. The 2008 panic caused all leveraged assets to sell off, I am certain this will be less pronounced should such a shock hit the system again. The stage is set, we're just waiting for the final act.

 

Silver i think fell to just over 9USD in the '2008 panic'? The next stage of the game is rising interest rates. UK and Euro rates are going to be higher by the end of the year. Euribor has spiked up a bit lately. Super low interest rates are becoming rarer all around the world. China has 19% bank reserve requirements. Rates are up already in many other countries. US rate rises really cannot be far away either. In the USA for example rent rises are happening in a significant number of areas and it will not be long before people prefer to buy rather than rent and the recovery there will be firmer and need holding back rather than having the extreme support it still has.

 

 

http://www.calculatedriskblog.com/2011/01/...high-price.html

 

You could be waiting decades for the final act.

 

 

 

 

[LauraB]

http://www.calculatedriskblog.com/2011/01/...high-price.html

 

You could be waiting decades for the final act.

 

So, I should ditch my PMs because of the current activity in Austin, Texas?

[electroweak]

So, I should ditch my PMs because of the current activity in Austin, Texas?

IMO, not until REAL interest rates are positive by at least 2% (real=accounting for inflation)..

 

Even then, they'd have to pull a Volker-style shift to convince me.

[carbon junkie]

IMO, not until REAL interest rates are positive by at least 2% (real=accounting for inflation)..

 

Even then, they'd have to pull a Volker-style shift to convince me.

True, but as I am sure you realise we can't do a Volker this time - too much debt.

 

IMO gold will only really start to accelerate in price when interest rates start to rise. Simply because CBs are always the last to spot inflation and always raise rates long after the geenie is out of the bottle.

 

When the Fed raises rates we will know inflation is running riot. Can't wait to see Ben raise rates myself.

[InternationalRockSuperstar]

The next stage of the game is rising interest rates.

 

nah, more like more printy printy.

 

UK and Euro rates are going to be higher by the end of the year.

 

no they're not. higher rates means large commercial banks would fail. it's pretty clear that the central bankers have decided not to let these banks fail.

 

Euribor has spiked up a bit lately.

 

it's still negative in real terms.

 

Super low interest rates are becoming rarer all around the world.

 

not if you're a UK tier 1 bank / FED primary dealer / other country equivalent. they all have access to central bank money at well below inflation.

 

China has 19% bank reserve requirements.

 

cool, so they're only insolvent 5 times over.

 

Rates are up already in many other countries.

 

almost every major central bank on the planet is lending money to their cronies at rates that are both lower than inflation and lower than the market rate.

 

US rate rises really cannot be far away either.

 

yes they can be.

 

in fact, they may never rise.

 

In the USA for example rent rises are happening in a significant number of areas...

 

no idea if that's true or not. a source would be nice.

 

In the USA for example rent rises are happening in a significant number of areas and it will not be long before people prefer to buy rather than rent and the recovery there will be firmer and need holding back rather than having the extreme support it still has.

 

er, why would people buying houses at higher prices firm-up a recovery?

 

[aliveandkicking]

no they're not. higher rates means large commercial banks would fail. it's pretty clear that the central bankers have decided not to let these banks fail.

 

Fed fund futures are showing expectations of a quarter point rise by april 2012 and almost 1.25 by end of 2012.

 

http://www.cmegroup.com/trading/interest-r...deral-fund.html

 

Obviously rates can go higher than the current 0.15% typical daily rate.

 

Even Citi bank is making a profit.

 

 

Today Brazil lifts rate 0.5% to 11.25%, meeting expectations.

[InternationalRockSuperstar]

Fed fund futures are showing expectations of a quarter point rise by april 2012 and almost 1.25 by end of 2012.

• how reliable is that indicator?
• does the Fed have a motive to intervene in that market (as they do in the US gov't debt market)?
• does the Fed have the means to intervene in that market (as they do in the US gov't debt market)?
• how does the Fed charging banks 1.25% with one hand have any effect when they are bailing the banks out with the other hand?
• even if it were possible for the Fed to reap 1.25% in interest payments from an utterly bankrupt banking system, isn't that still below inflation?

Citi bank is making a profit out like a bandit borrowing at below market rates from the Fed and lending to corporations and individuals at higher rates.

 

fixed.

 

even a complete spastard couldn't mess that one up.

 

Today Brazil lifts rate

 

and the USA doesn't.

[Carlton]

The current pullback seems to have similarities to the June/July 2010 correction, the June/July 2009 correction, and the Jan/Feb 2010 correction. Perhaps the Jan/Feb 2010 comparison is the most pertinent due to the time of year and the fact that that followed a rally that failed to set a new high, like our last rally.

 

I wouldn't mind a spike down to $1250-1300; that would make me feel good about recommitting cash.

[aliveandkicking]

[*]how reliable is that indicator?

[*]does the Fed have a motive to intervene in that market (as they do in the US gov't debt market)?

[*]does the Fed have the means to intervene in that market (as they do in the US gov't debt market)?

 

The Fed funds rate is a calculated rate produced when the banks lend to each overnight between each others Reserve Account at the Fed where each bank with spare reserves attempts to lend them profitabily to the banks short of reserves.

 

The Fed can attempt to lower that rate by buying assets from the banks at whatever price it wants so that the banks have more reserves. But in that case and when inflation is very high the banks who already have plenty of reserves will lend at a rate that makes their loans profitable in an inflationary environment and the fed will be powerless to get the fed funds rate lower unless it deals with inflation.

 

In a similar manner once inflation rises the fed has no power to reduce yields on US treasuries, other than by acting to reduce inflation, since the yield is what the buyer receives annually after he buys the treasuries at the price he thinks is reasonable with his set of inflation expectations.

 

If fed fund futures are showing higher rates and higher rates dont come then the fed loses credibility and banks expect more inflation and rates rise more anyway.

[warpig]

I disagree it's ZIRP for the foreseeable future, anything else will cause a financial catastrophe. Irrespective of what you think is coming, you can bet your last dollar the government will keep bending the rules to keep the plates spinning.

 

Silver i think fell to just over 9USD in the '2008 panic'? The next stage of the game is rising interest rates. UK and Euro rates are going to be higher by the end of the year. Euribor has spiked up a bit lately. Super low interest rates are becoming rarer all around the world. China has 19% bank reserve requirements. Rates are up already in many other countries. US rate rises really cannot be far away either. In the USA for example rent rises are happening in a significant number of areas and it will not be long before people prefer to buy rather than rent and the recovery there will be firmer and need holding back rather than having the extreme support it still has.

 

 

http://www.calculatedriskblog.com/2011/01/...high-price.html

 

You could be waiting decades for the final act.

[aliveandkicking]

I disagree it's ZIRP for the foreseeable future, anything else will cause a financial catastrophe. Irrespective of what you think is coming, you can bet your last dollar the government will keep bending the rules to keep the plates spinning.

 

If the government could alter the long term interest rate structure why did all those millions who lost their homes have to pay 4.5% interest? Obviously the future is going to have higher inflation in it than the last few years of near economic death. With higher inflation comes higher interest rates.

 

Even so, like International rockstar, you can be confidant that interest rates will not be raised sufficiently to prevent inflation.

[marceau]

If the government could alter the long term interest rate structure why did all those millions who lost their homes have to pay 4.5% interest? Obviously the future is going to have higher inflation in it than the last few years of near economic death. With higher inflation comes higher interest rates.

 

Even so, like International rockstar, you can be confidant that interest rates will not be raised sufficiently to prevent inflation.

 

That's exactly it. Interest rates will rise, but let's be totally clear, there's no Volker out there, or anything like the political will to create him. There's no chance of western governments getting ahead of inflation, absolutely no chance.

 

They may succeed in generating occasional scares, but the dips they create will be buying opportunities. Unless the deflationary black hole totally overwhelms things, positive real interest rates are at least a decade away and we'll have to endure a huge amount of inflationary pain before someone is allowed to get a grip of the situation.