Steve Netwriter Posted March 21, 2008 Report Share Posted March 21, 2008 In Peter Schiffs latest economic commentary he mentions an article in the Wall Street Journal by opinion page writer Holman Jenkins Jr that recommended that the government buy and “bulldoze” foreclosed homes in order to prop up the values of those that remain standing. Finally, in response to Mr. Jenkins’ proposals, there is no question that we built far too many homes during the housing bubble. However, destroying them now will merely compound our losses. The one benefit we have from excess construction is an ample supply of what will soon be highly affordable homes. At the moment foreclosed houses are only unwanted because their prices are still too high. Once prices drop sufficiently there will be plenty of demand. However, destroying existing homes reduces their value to zero (actually less due to demolition costs) and only exacerbates the losses to creditors and society. Mr. Jenkins’ thinking is formed by the same perverse logic that led the Roosevelt Administration to destroy farm animals and crops during the 1930’s because he wanted to prop up food prices. As I wrote in my book “Crash Proof”, we must certainly be on the eve of our financial destruction, as we are clearly a nation gone completely mad. http://www.europac.net/ Brilliant. Can I just say I've read a couple of your posts recently and thought they were very good. That also applies to a number of other people on here. I'm trying not to clog up the thread with thanks. So to all the great posters on here, thanks Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 21, 2008 Report Share Posted March 21, 2008 I'm confused on this Fed rate cut. I'm not the only one who thought they'd cut on Sunday by 0.25%. On top of the recent one of 0.75%, that would have made a full 1%. But, according to this: http://www.federalreserve.gov/fomc/fundsrate.htm 2008 March 18 ... 75 2.25 January 30 ... 50 3.00 January 22 ... 75 3.50 Not Am I wrong about the Sunday one then ? Link to comment Share on other sites More sharing options...
Rosco Posted March 21, 2008 Report Share Posted March 21, 2008 I'm confused on this Fed rate cut. I'm not the only one who thought they'd cut on Sunday by 0.25%. On top of the recent one of 0.75%, that would have made a full 1%. But, according to this: http://www.federalreserve.gov/fomc/fundsrate.htm 2008 March 18 ... 75 2.25 January 30 ... 50 3.00 January 22 ... 75 3.50 Not Am I wrong about the Sunday one then ? Sunday & Tuesday they cut the Discount rate by 0.25 & 0.50% respectively Tuesday the cut the Fed Funds by 0.75% Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 21, 2008 Report Share Posted March 21, 2008 Ahh ha ! Thank you. Link to comment Share on other sites More sharing options...
ologhai Posted March 21, 2008 Report Share Posted March 21, 2008 I've lost track of who has made it across from HPC.co.uk and who hasn't, so apologies if 'Fortune' on HPC is one of you, but here's a link to Fortune's post of about half an hour ago on HPC's Gold thread. You may find it interesting: http://www.housepricecrash.co.uk/forum/ind...p;#entry1025435. Unless I'm misreading it, gold itself may not go beyond $1k or so (i.e. $1k is the 'right price' for gold about now), and, instead, it might be a better plan to buy into gold-related stocks. Please, please do correct my interpretation if it's in error... Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 21, 2008 Author Report Share Posted March 21, 2008 http://www.financialexpress.com/news/Asia-...-sinks/286761/0 Asia jewellers on buying spree as price sinks Reuters Posted online: Thursday , March 20, 2008 at 1247 hrs IST Jewellers across Asia rushed to buy gold on Thursday after prices tumbled more than $100 an ounce since spiking to a record above $1,000 an ounce this week, pushing up premiums in key bullion trading centres. Gold fell more than 2 percent to hit a 1-month low of $920.30 an ounce as funds sold bullion after pushing up the price to a lifetime high of $1,030.80 on Monday. Dealers also noted buying from investors as surging oil prices elevated gold's appeal as a hedge against inflation. India, the world's largest consumer, was buying on dips as the busy wedding season progressed. "I see very good investment offtake in China, Vietnam and Japan," said Albert Cheng, managing director for Far East of the World Gold Council. As has been said many times before, the Asians show a talent for dip-buying. My darn funds are not through yet. Link to comment Share on other sites More sharing options...
chazza Posted March 21, 2008 Report Share Posted March 21, 2008 Interesting to read Plutos comments over the past couple of pages. His thinking is very similar to mine in that the increase in money supply needs to find its way into the mainstream to keep supply rising and inflation ticking over. One thought is that with the Fed demonstrating that nothing is going to fail then we avoid in the short term a economic collapse and a contraction/deflation. The money injected into the financial system keeps the status quo operating and the we inflate the bubble further. On the other hand if a bank was left to implode, the dominoes would start and the current charade to keep the financial system afloat would not be required. So, take out all the recent injections (where they still can) and M3 falls of a cliff. Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 21, 2008 Author Report Share Posted March 21, 2008 Interesting to read Plutos comments over the past couple of pages. His thinking is very similar to mine in that the increase in money supply needs to find its way into the mainstream to keep supply rising and inflation ticking over. One thought is that with the Fed demonstrating that nothing is going to fail then we avoid in the short term a economic collapse and a contraction/deflation. The money injected into the financial system keeps the status quo operating and the we inflate the bubble further. On the other hand if a bank was left to implode, the dominoes would start and the current charade to keep the financial system afloat would not be required. So, take out all the recent injections (where they still can) and M3 falls of a cliff. The Fed's main objective at the moment is to avoid a general stock market panic and a general bank panic. They will do EVERYTHING to avoid this. However, they won't save shareholders of individual stocks, like Bear Stearns. M3 will explode further. Keeping the system afloat means allowing people to take their money off the table (off the subprime/banking table), and putting it somewhere else. The crucial question therefore is: what is this somewhere else? I think the answer is clear: short term it is some short horizon Treasuries, long-term the bull market in commodities outshines everything else. Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 21, 2008 Author Report Share Posted March 21, 2008 FSN radio show is not online yet. Link to comment Share on other sites More sharing options...
narco Posted March 21, 2008 Report Share Posted March 21, 2008 FSN radio show is not online yet. Its friday. Link to comment Share on other sites More sharing options...
ConvertedGoldBug Posted March 21, 2008 Report Share Posted March 21, 2008 I have a question. It keeps being mentioned that the banks/hedge funds can't "short" the physical bullion that you own (i.e. it's better to hold physical coins etc. than use ETFs). So what if all the gold in the world was owned physically by someone, does that mean that they couldn't still influence the prices? Is all the gold already owned? People own gold... central banks own gold... etc. I would have thought that these things can still be manipulated to affect the price and value of your gold? PS: Still waiting for my first delivery from CoinInvestDirect that I ordered on Sunday... phoned them Tuesday to enquire if my order was being processed, gave my number for them to ring back, but never heard anything... not had any order confirmation email or such like... should I have heard something by now? Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 21, 2008 Author Report Share Posted March 21, 2008 Its friday. Oops, RIGHT. Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 21, 2008 Author Report Share Posted March 21, 2008 http://business.timesonline.co.uk/tol/busi...icle3593992.ece Building societies began turning borrowers away yesterday. A series of small societies, including Bath Building Society and Earl Shilton Building Society, withdrew all their home loan offers after it became impossible to secure funding for lending. The sudden exodus shows that the turmoil in the credit markets is trickling down to building societies, many of which rely on interbank lending for as much as 30 per cent of their funds. Major meltdown in progress. Bottom will fall out of house prices. Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 21, 2008 Report Share Posted March 21, 2008 I've lost track of who has made it across from HPC.co.uk and who hasn't, so apologies if 'Fortune' on HPC is one of you, but here's a link to Fortune's post of about half an hour ago on HPC's Gold thread. You may find it interesting: http://www.housepricecrash.co.uk/forum/ind...p;#entry1025435. Unless I'm misreading it, gold itself may not go beyond $1k or so (i.e. $1k is the 'right price' for gold about now), and, instead, it might be a better plan to buy into gold-related stocks. Please, please do correct my interpretation if it's in error... http://www.kitco.com/ind/Gerbino/mar202008.html I agree with the point about adjusting the peak price from 1980. I've thought that before. However, he works out "the correct" price from the more normal price back then, and comes to $1050 therefore as the normal price for now. Since now is not normal (and he lists the reason why it is not), it's obvious is it not that the "correct price" for now is above $1050. The Mystery of the Gold Market - Conclusions on the Selling Pressure http://www.kitco.com/ind/Gerbino/mar202008.html The one misleading analysis that is in print on many pro gold websites is based on taking the gold price at its very high of $850 from 1980, then adjusting it for inflation and coming up with a gold price of over $2,000 for 2008. This is a grave error. The gold price then had nothing to do with economic reality. It was a four month spike that did not reflect anything from an economic standpoint except fear and greed and speculation. It collapsed shortly afterwards. The gold price adjusted for inflation from 1789 (when our Founding Fathers were in control) to 1980 should have been around $360 based on wholesale price increases. Adjusting the gold price since then based on inflation to 2008, (using an untrustworthy CPI index from the Bureau of Labor Statistics from 1979 of 72.6 to February of 2008 of 211.7 the increase in prices is 191.6%) one comes up with $1,050 as a reasonable current price for gold. This price to me is reasonable and leads one to the conclusion that owning mining stocks that can produce gold for less than $400-450 an ounce in the coming years has to be a smart way to think. I remember back in 1974 when gold peaked out at $200 in the face of plenty of bad economic news and plenty of inflation. By 1976 it hit $103. Then it took off to $850 in 1980. We could be seeing the same sort of reaction here before the resumption of the bull market. Luckily for gold investors there are some major new developments this time. These are: India, China, money supply increases now that make Nixon and Burns (ex Fed Chairman) look like choir boys, the derivative market, and the Wall Street banking crisis brought on by the U.S. housing speculation and two decades of easy money policies by Alan Greenspan. Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 21, 2008 Author Report Share Posted March 21, 2008 I agree with the point about adjusting the peak price from 1980. I've thought that before. However, he works out "the correct" price from the more normal price back then, and comes to $1050 therefore as the normal price for now. Since now is not normal (and he lists the reason why it is not), it's obvious is it not that the "correct price" for now is above $1050. The Mystery of the Gold Market - Conclusions on the Selling Pressure http://www.kitco.com/ind/Gerbino/mar202008.html We won't stay at the normal price or in equilibrium. There is always an over-shoot or under-shoot. Link to comment Share on other sites More sharing options...
ologhai Posted March 21, 2008 Report Share Posted March 21, 2008 We won't stay at the normal price or in equilibrium. There is always an over-shoot or under-shoot. Yes, of course. But if we were to assume that $1k/oz is about the correct price for gold right now, isn't $1650 a bit much for an 'over-shoot'? Or am I misunderstanding your point? Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 21, 2008 Report Share Posted March 21, 2008 I don't think he's saying $1050 is the right price for now. As I said, I think he has inflation adjusted the normal price. So $1050 is the normal price. And as he says, that's based on rubbish inflation numbers ! This is not a normal time, so the price should be higher. Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 21, 2008 Report Share Posted March 21, 2008 Anyway, if you include the "flight to safety" of various quantities of money, you get various numbers like this: Link to comment Share on other sites More sharing options...
Steve Netwriter Posted March 21, 2008 Report Share Posted March 21, 2008 David Morgan How high is Silver going? *AUDIO* http://www.howestreet.com/audiovideo/index...mediaplayer/811 An interesting audio. He talks about the Bear Stern rescue causing leverage unwinding, including those in gold & silver. Ride that gold & silver bull, and hold on tight Link to comment Share on other sites More sharing options...
G0ldfinger Posted March 21, 2008 Author Report Share Posted March 21, 2008 Yes, of course. But if we were to assume that $1k/oz is about the correct price for gold right now, isn't $1650 a bit much for an 'over-shoot'? Or am I misunderstanding your point? Two things: (1) Jim Sinclair created the $887.50 top back in 1980 because he thought that $900 was the 'fair' price given the foreign liabilities of the US. (2) An overshoot can be dramatic. See dotcom. Link to comment Share on other sites More sharing options...
Gatesy Posted March 21, 2008 Report Share Posted March 21, 2008 http://business.timesonline.co.uk/tol/busi...icle3593992.ece Major meltdown in progress. Bottom will fall out of house prices. I heard the CEO of Bath BS interviewed on Radio 4 yesterday. His explanation for the 'temporary' (2 to 3 weeks) withdrawl of mortgage products was that they had been overwhelmed with applications in recent weeks, from people looking to re-mortgage, which they couldn't keep on top of administratively. .. Link to comment Share on other sites More sharing options...
Pluto Posted March 21, 2008 Report Share Posted March 21, 2008 Dealers swift to borrow from Fed under new rules Primary dealers borrowed more than $13.4 billion a day from the Federal Reserve in the latest week, showing brokers were swift to take advantage of new rules allowing them to obtain loans directly from the central bank. Dealers had borrowed nearly $29 billion by Wednesday, Federal Reserve data released on Thursday showed. http://news.yahoo.com/s/nm/20080321/bs_nm/...ountwindow_dc_1 LEHMAN, ___ GOLDMAN, ___ MORGAN Link to comment Share on other sites More sharing options...
bob monkhouse Posted March 21, 2008 Report Share Posted March 21, 2008 Has it peaked or is it a shakout??? Im not convinced either way. Remember the wall street crash? 25% in two days. People thought worse was to come, when it was a correction resulting from exuberance. Such large corrections often occure in bull markets, not bear markets. Could this be the same for gold? Buying opportunity? p.s cgnao DID call for this correction two days before it happened... Link to comment Share on other sites More sharing options...
enrieb Posted March 21, 2008 Report Share Posted March 21, 2008 FSN radio show is not online yet. I made the same mistake before, I woke up looking to download the show. I wonder how many confused listeners have emailed or phoned the show to complain. Peter Schiffs weekly radio broadcast is available for download on Thursday mornings, Its pretty good, about an hour long and helps give a little more insight into whats happening during the week. It helps fill the information gap while waiting for the FSN broadcast which tends to review what has happened in a more in depth way before looking ahead. http://www.europac.net/radioshow_archives.asp Link to comment Share on other sites More sharing options...
Errol Posted March 21, 2008 Report Share Posted March 21, 2008 p.s cgnao DID call for this correction two days before it happened... To be fair, that is hardly rocket science. I've been anticipating a correction for a month or two now. The market was over-extended and I'm hoping it can get back into the $800s. Link to comment Share on other sites More sharing options...
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