$1300 Gold, and $21.50 Silver....

[william the wie]

LOL..............

http://www.marketoracle.co.uk/index.php?name=News&file=article&sid=23094

Silver may well explode in price but given how tiny the trigger is for gold I would expect jewelry to take off since it is not covered by the 1099 form or so I understand. Also this should be a big boost for cruise ships.

 

[editec]

Some of you people playing precious metals might find this interesting

Gold and Precious Metals

And of course, the following is also part of the precious metals equasion, too

U.S. National Debt Clock : Real Time

I think it cannot be entirely a bad idea for those of us with spare dough to TAKE PHYSICAL POSSESSION OF some modest amount of silver and gold.

How much of your portfolio goes into such a conservative (end of the world) defensive investment strategy really depends on your ability to live with risk and your confidence in the specie and economy overall.

Anybody whose incomes are still comfortably middle class ought to have at least a couple pounds of silver coin sitting in their safety deposit boxes, in my opinion.

In the very unlikely event that the dollar really collapses, silver coins are going to be very useful medium of exchange.

I figure a US or Canadian silver dime is going to be worth a loaf of bread no matter what happens to the specie.

If you buy non-numismaticsilver coinage in bulk, the premium you're paying for puchasing silver as easily recognizable coinage isn't too terrible.

Remember, I'm not suggesting this move as an investment. It's more of an end of the world safety net that most home economies can still afford.

In the best case scenario, it's a couple bags of silver coins you get to leave your kids.

In the worst case, it's something you can count on as a viable specie that might feed your family in truly dire circumstances.

 

[Toro]

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.

The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.

How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.

 

[The Rabbi]

None of that is borne out by real life. All currencies cannot fall at the same time, since they are traded against each other. No one buys assets with gold. No company in Canada goes to Germany to buy equipment and offers gold. They must pay in Euros.
The whole "entire world debasing its currency" is a myth.

All currencies cannot fall against each other. But they can all fall against real assets.

For example, if the total money supply of the world comprised of various currencies is $1 billion, and all the countries double their money supply, everything else being equal, the price of real assets should double. Thus, the price of gold should double.

Yes, a Canadian company pays in euros, not in gold, but they could pay in gold if both parties wished.

If that were so then you would see a world wide rise in prices. We're not seeing it. We're not seeing hints of it. The yield curve is flat in the US, Europe, Britain, and Japan.

 

[The Rabbi]

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.

The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.

How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.

The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.

 

[Paulie]

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.

The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.

How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.

The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.

The point made in that particular discussion is that SOMEONE is buying stocks, and it's damn near impossible to pinpoint who it is.

Everyone seems to be stuffing their cash in mattresses because they're afraid to spend it, but there is ONE source of cash that never needs to worry about its supply...the Fed.

Just because it can't be proven, doesn't mean it isn't the most likely source given the situation.

 

[Toro]

None of that is borne out by real life. All currencies cannot fall at the same time, since they are traded against each other. No one buys assets with gold. No company in Canada goes to Germany to buy equipment and offers gold. They must pay in Euros.
The whole "entire world debasing its currency" is a myth.

All currencies cannot fall against each other. But they can all fall against real assets.

For example, if the total money supply of the world comprised of various currencies is $1 billion, and all the countries double their money supply, everything else being equal, the price of real assets should double. Thus, the price of gold should double.

Yes, a Canadian company pays in euros, not in gold, but they could pay in gold if both parties wished.

If that were so then you would see a world wide rise in prices. We're not seeing it. We're not seeing hints of it. The yield curve is flat in the US, Europe, Britain, and Japan.

We're seeing a worldwide rise in asset prices, including bonds, which is why the curve has been flattening on the long end. The money is going into asset prices, not consumer prices.

 

[Toro]

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.

The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.

How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.

The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.

Right. But when your Tbonds are being swept away by the Fed, cash earns you 0%, forcing the banks out onto risk curve, which is what causes asset prices to rise as banks demand other paper to replace their purchased government bonds.

 

[Paulie]

The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.

How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.

The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.

Right. But when your Tbonds are being swept away by the Fed, cash earns you 0%, forcing the banks out onto risk curve, which is what causes asset prices to rise as banks demand other paper to replace their purchased government bonds.

Does an institution HAVE to sell treasuries to the Fed?

 

[The Rabbi]

The mechanics of quantitative easing are such that when the Fed buys Tbills, the seller has cash that it then uses to buy other assets. You can see this in a simple example. If a bank has an asset/liability target of 4 years and has two assets of the same size with the same duration of 4 years, if the Fed purchases one of those assets, duration of the asset portfolio falls to 2 years because cash has a duration of 0. The bank then goes out and buys an asset with a duration of 4 years with the cash deposited into its account by the Fed to get its asset duration back to 4 years. This buying of the new asset increases demand for the asset and increases its price.

How much of the stock and bond market's ascent is due to QE and how much to economic improvement is unknown, but QE certainly has an affect.

The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.

Right. But when your Tbonds are being swept away by the Fed, cash earns you 0%, forcing the banks out onto risk curve, which is what causes asset prices to rise as banks demand other paper to replace their purchased government bonds.

Euro bonds. Japanese bonds. Australian bonds. Lots of ways to make money when you borrow at zero.
None of that suggests gold is going to go up up up. I'm not aware of any market sector that has a rally lasting more than 5 years.

 

[Toro]

The seller is usually a bank. Banks have been taking their money and re investing it i treasuries, even borrowing short and lending long. It is a lot surer money than buying stocks.

Right. But when your Tbonds are being swept away by the Fed, cash earns you 0%, forcing the banks out onto risk curve, which is what causes asset prices to rise as banks demand other paper to replace their purchased government bonds.

Euro bonds. Japanese bonds. Australian bonds. Lots of ways to make money when you borrow at zero.
None of that suggests gold is going to go up up up. I'm not aware of any market sector that has a rally lasting more than 5 years.

There are lots of ways to make money when interest rates are 0%, including buying stocks, bonds, commodities, etc. That's the point. The Fed buying securities injects cash into the financial system, which causes demand for all other assets to rise. Its supply/demand.

Commodity structural bull markets have on average lasted 14 years over the past century, ranging from 9 years to 20 years. You have cyclical bear markets, and gold has seen a few 20% declines or more this decade. Just like the equities bull market from 1982 to 2000, there were several cyclical bear markets, including the worst one day crash ever. The structural bull market in gold is intact.

 

[loosecannon]

Other commodities are much more a function of the real economy. But it is interesting that oil is at $80 while most of the world's economies are weak. What's going to happen to the price of oil when the US economy starts to strengthen?

That depends on the futures market, demand and supply issues. But I expect food and oil prices to increase regardless of economic recovery. esp considering the debasement trend.

But what about a trade war? What will happen if nations flood the economy with money and stiffle supply simultaneously? That's a recipe for hyperinflation, which is why trade wars scare me.

There is gonna be a backlash against globalization and some kind of new nationalist protectionism is gonna prevail.

As for real estate, I think the cheapest asset in the world right now is US land. Given the massive supply of real estate still sitting on banks' books, I don't expect real estate prices to move upwards much anytime soon. But raw land prices here in parts of Florida have fallen by up to 90%-95%. And decent properties, too. Beachfront has fallen by 60%-70% in some areas. With all this money sloshing around the world, it will eventually flow back in.

astonishing. Our raw land prices are down by less than 50% since the peak about 4 years ago. Beachfront property is still prohibitively expensive for almost everybody.

 

[uscitizen]

The Fed has been pumping cash into the markets to prop them up, dude.

GASG: Is the FED propping up the stock market?

Tepper tells CNBC Fed will prop up market Hedge Funds - MarketWatch

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.

HUH? Are you daft?

He will not answer that honestly.

 

[The Rabbi]

Unfortunately your links don't substantiate the idea that the stock market is rising because the Fed is pumping money into it.
Actually they don't substantiate much of anything at all.

HUH? Are you daft?

He will not answer that honestly.

No, I am not daft.
That's an honest (and true) answer.
Anyone who reads those articles and thinks they prove the Fed is pumping money into the stock market is daft.
US, try sticking with topics you know something about. Like pie eating or Three's Company.

 

[loosecannon]

Anyone who reads those articles and thinks they prove the Fed is pumping money into the stock market is daft.

prove is the wrong word.

But anybody who doesn't believe that the Fed and the BOJ financed the housing bubble, the dot com bubble, the commodities bubbles of 08, and today's stock markets should just mail their money directly to Bernie Madoff.

 

[william the wie]

With some junk bonds selling to yield less than their probability of default such as the New York Times recently I would say there is ample evidence of inflation.

 

[loosecannon]

With some junk bonds selling to yield less than their probability of default such as the New York Times recently I would say there is ample evidence of inflation.

there had been ample evidence of deflation for two years, but until it shows up in the CPI the public won't recognize it.

 

[The Rabbi]

Anyone who reads those articles and thinks they prove the Fed is pumping money into the stock market is daft.

prove is the wrong word.

But anybody who doesn't believe that the Fed and the BOJ financed the housing bubble, the dot com bubble, the commodities bubbles of 08, and today's stock markets should just mail their money directly to Bernie Madoff.

If you believe that then you need to be medicated.

 

[The Rabbi]

With some junk bonds selling to yield less than their probability of default such as the New York Times recently I would say there is ample evidence of inflation.

Sorry, that isn't ample evidence of anything other than people desperately looking for yield in a zero interest rate environment.

 

[loosecannon]

Lmao!