RoR: Forum

It has dropped 55.5 today so far...

Post 41

Friday, April 12, 2013 - 10:35am

Gold may continue to drop - the short term markets are, by their nature, quite blind to the longer term fundamentals. Gold is being sold and people are getting into the dollar and into equities as if we were looking at the beginning of a long term recovery of the economies - here and Europe. But there is still the number of dollars that Bernanke has pumped out and when they start to circulate we will see price inflation. As a matter of fact, we might be seeing the dollars come out of reserve accounts now, fueling the stock market - a fiat money induced fiat recovery. And the long term for our markets is still saddled with the same number of regulations, the same anti-business administration, the same brain-dead congress, the same willingness of the fed to spend 40% more than they take in, the same massive federal debt, the same entitlements problems, the same chronic unemployment problems, the same low savings rate, the same massive derivatives overhang, the same risks of European credit collapse, and the same looming bankruptcies from states like California, and cities like Detroit. Short-term markets can move back and forth between being hedonistic, manic believers that utopia has just arrived versus panicked, doomsayers who can't unload everything fast enough.

Post 42

Friday, April 12, 2013 - 10:47am

Kurt,

At some point in the not too distant future, gold will return to its historic role of a store of value (not the same as a transactional currency).

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I think that gold is acting as a store of value now, despite price fluctuations. That is, people are purposely using it as a store of value. The price fluctuations are more a symptom of changing political risks (e.g., war in the Middle East) and changing evaluations of risk to the dollar or equities markets and short term speculation. They are wide fluctuations because we live in volatile times.

If memory serves me, Paul (Sam Erica) designed a slick means of using gold as a transactional currency. Something like plastic coins, or cards, with a tiny amount of gold embedded. There was was much more to it than that... I've just forgotten the details.

Post 43

Friday, April 12, 2013 - 10:54am

http://m.youtube.com/#/watch?feature=related&v=91_5YxmJ9Ic

This song says it all Steve. (When viewing the stock market).

This will never end
'Cause I want more
More, give me more
Give me more

This will never end
Cause I want more
More, give me more
Give me more

If I had a heart I could love you
If I had a voice I would sing
After the night when I wake up
I'll see what tomorrow brings

If I had a voice, I would sing

Dangling feet from window frame
Will I ever ever reach the floor?
More, give me more, give me more

Crushed and filled with all I found
Underneath and inside
Just to come around
More, give me more, give me more

If I had a voice, I would sing

Fever Ray

Post 44

Friday, April 12, 2013 - 1:50pm

Steve it is, but not openly. Hard to explain, read some of the fofoa blog. The new post is interesting as well. The instability now is a sign that we are getting closer to this time.

Post 45

Friday, April 12, 2013 - 6:48pm

Bitcoins trading suspended.
http://money.msn.com/now/post.aspx?post=c8c8784f-57b4-4e98-9b82-0d0bb993074f

An interesting quote from that article: "Second, there needs to be a good way to short Bitcoins to keep speculation down more organically."

Warren Buffett once said that he loves people who short Berkshire Hathaway because they are telling him where the floor is.

re: Gold, perhaps this should go into the Gold! topic under General, but, to spin from Kurt's comments, in general, the bottom line with gold is that most of it is in jewelry. Jewelry gets a 300% or much more mark-up wholesale to retail. Relative to gold bullion, jewelry is relatively inelastic: if the price of gold changes, the price of wedding rings, earrings, and piercings is not immediately affected - and can change without appreciably altering demand: people will still get married.

Gold's monetary uses are secondary, just above industrial. So, (according to GATAC the Gold Anti-Trust Action Committee) the central banks are more easily able to manipulate the price to keep itheir currencies from collapsing. They borrow and lease gold and carry it on both sides of their books, for instance. They short it among themselves ahead of bad news from the US FRB, Eurobank, etc., to keep people from fleeing their currencies. At least that is what GATAC claims.

Gold is something you should buy continuously and continually when and as you want to save for the farther future. It is, as Kurt says, a store of value.

(Edited by Michael E. Marotta on 4/12, 6:53pm)

Post 46

Sunday, April 21, 2013 - 7:04pm

2013-04-17: Fed reports US monetary base is now 3,000 billion dollars. The base was 800 billion back in 2008, an average rate of inflation of 34% per year over the last 4.5 years.

Post 47

Sunday, April 21, 2013 - 7:36pm

I'm thinking that much of that 3,000 billion is still being held tight in reserve accounts (both in banks and in corporations) and that despite a slight loosening up, the demand for cash is still high for nearly everyone. Loans are still down, and people have paid off debt or increased savings. Businesses aren't hiring or expanding.

In addition, a chunk of that money could be piled up in the foreign currency accounts of nations with large positive trade balances... and as long as our economies and Europe's economies are weak, those accounts will remain high.

In addition, the strong showing of the equity markets makes sense if much of that is fiat currency making a bubble.

In addition, all of the doubt among businesses as to whether we are actually in weak recovery or a false recovery, the massively higher levels of regulation, the anti-business attitude of the government, the artificially low interest rates... all of these could be creating a stagflation - and so far most of what we are seeing is the stagnation part.

Peter Schiff theorizes that some of the very weak, near collapsing governments (Cyprus, Greece, Italy, Portugal, etc.) have a great deal of gold in reserve, and they may end up having to sell it to governments that have a great deal of foreign currency in reserve (India, China, Brazil, Russia, etc.) He thinks that the effect will be to put lots and lots of dollars into circulation. While inside the Chinese banks they were not chasing that many goods or services - just sitting in a reserve account - but if they were used to buy gold from the nations in trouble, those dollars would be in the hands of debtor nations that would need to pay their bills and zoom - strong inflationary pressures as the dollars started circulating. The gold would then be in stronger hands and not as likely to move for a while.

I don't know how that 3,000 billion is going to get expressed, but it will. We certainly haven't been seeing 34% per year, so it is piling up. And things could start to rapidly snowball. I don't think I've ever seen anything as scary as the fiscal future Obama, Congress, and Bernanke are moving towards like it was a race.

(Edited by Steve Wolfer on 4/21, 7:48pm)

Post 48

Sunday, April 21, 2013 - 9:35pm

On the bright side the U.S. housing starts show signs of recovery. Also there IS cautious optimism in the markets.

(Source: FreeStockCharts.com)

S&P 500's Q1 2013 Results So Far

As of April 18, 104 of the companies in the S&P 500 reported earnings and 70 beat estimates. The financials sector had the largest amount of companies reporting. Most of the big banks delivered Q1 results that were good, but not great. Their stocks subsequently drifted lower, but the reaction has been muted.

In other words as you say Steve the banks are sitting on it. So they are most likely making their money by trimming costs and outsourcing because the profit margins on loans/mortgages are extremely low with current interest rates.

Some of the mREITs are doing incredibly well at present however the Feds will probably screw them over soon with regulations/leverage caps.

I am still in the market at present 30% Canadian corperate/government (mostly corp as govt bonds are far more sensitive to interest raises. )short-mid laddered bond ETF's . 40% US equities 5% global corp bond indexes and 25% global of that 25% 70% of it is in Asian equities.

Still have some physical silver/gold "just in case" but honestly if shtf food and bullets will be of more value..

All liquid and ready to short if need be. Remaining debt free above all would be prudent.

Post 49

Sunday, April 21, 2013 - 11:23pm

Jules,

On the bright side the U.S. housing starts show signs of recovery. Also there IS cautious optimism in the markets.

Perhaps. But I don't know how to tell what part of what appears to be a recovery might be real, and what part is an effect of fiat money entering the various markets.

I do know that humans don't have real long attention spans, and tend to favor what they want... those two factors can lead us to see more recovery than might be there.

Also, businesses adapt. They find ways to cut costs, target their market more closely, and the losing propositions get dumped. Every business that goes under gives his competitors a larger market share. So, it is reasonable to expect things to look better after enough time, even if the causes of the problems - of the last collapse, and this seemingly unending malaise - the various government interventions, haven't been corrected.

I've never been any good at judging the timing. And I doubt that I'm any good at judging when the markets no longer have enough adjustment left in them to weather the government's ever-increasing burdens. In other words, I don't know when the next big downturn is coming, but when I look at the long list of built-in bad news that awaits (California's debt crisis, some of our big cities going under, European countries ready to tank, ObamaCare's implementation, the massive amount of fiat currency we haven't seen surface yet, etc., etc.), I know that we have massive trouble ahead, but maybe the next crash is twenty years from now, rather than the more immediate future. I just don't know.

Post 50

Monday, April 22, 2013 - 12:44am

Time is actually on our side. The European crisis(s) in a round about way is actually to U.S. benefit. It will allow the USD to remain the currency of choice. This will give the needed time for businesses to adjust and GDP to grow. I have learned NEVER to bet against the US. Just like Rocky getting the bejeezus pounded out of him by Ivan Drago he staggered through it and came out on top.

Canada? Nottt so much. The tsx has taken a real beating lately as our economy is largely commodity driven. That and we have a huge real estate bubble that is about to pop like yours did a few years ago.

One really important factor to also consider. How many people treat investing like gambling? The markets largely are driven (at least short term) by fear and greed. Not many people can keep these emotions out of investing. So many people look for that "home run" winner. These people end up taking on much more risk than warranted and often end up chasing the herd buying high and selling low..over and over until they become discouraged. The main thing is to remain diversified and mitigate your risk and reduce the impact of market volatility.

Heck many "experts" say the buy and hold strategy is long dead. Simply not true!

Post 51

Tuesday, April 23, 2013 - 3:29pm

A Rise in Wealth for the Wealthy; Declines for the Lower 93%

I just found this at the top of google's business news section. I looked at it for a few minutes, and realized that hey, its talking about the years 2009-2011. The stock market crashed to a low level at the end of 2008, and then nominally significantly recovered by 2011. So... the article is ridiculous. If they would have changed the study to be from 2008 to 2011, then they would have found that the most wealthy people lost a higher percentage.

Despite that shortcoming of the article, over the long term, I thought it was clear that the wage earners get screwed the most by inflation?
(Edited by Dean Michael Gores on 4/23, 3:30pm)

Post 52

Thursday, April 25, 2013 - 3:40am

A Million Electronic Currencies

Well, maybe not that many, but Tuesday night at a meeting of "Austin on Rails" (for developers and others in the "Ruby on Rails" computer programming platform), I listened in as the devops person at Lodestone Social explained his business to another developer. You will have to find out from the site how Facebook "likes" become rewards points which accumulate to tokens, but the take-away was that fans of the Jacksonville Jaguars could spend tokens to see the new uniforms before they were announced officially.

Similarly, as two of the many million fans of "Big Bang Theory" we visit the CBS.com pages for the show and before the launch of the 2012-2013 season, they ran trivia contests, the prizes for which began as "points" that were spendable in other media.

I also am a fan of Felicia Day's "The Guild" and recently purchased (with real money) the first three "seasons." (The story lines are not long enough for an actual television season. This is a web thing.) The point is that many online games involve the accumulation of "game gold" which can be spent in-game of course, but, also are tradable off-game.

Post 53

Thursday, April 25, 2013 - 6:14am

Michael a friend of mine made over 40k USD selling Runescape stuff/accounts in 6 months. People are silly that way. All goes to show "one man's garbage is another man's treasure".

Post 54

Thursday, April 25, 2013 - 8:13am

Physical gold and silver out of stock.

Just wanted to give you all a heads up on the recent gold & silver news. On April 12 & 15th paper gold was hit by some major shorting (shorting means borrowing & selling, & needing to buy back later to return to lender), which brought the paper gold price down to less than $1400. Paper silver also dropped in price. In response to the lower paper gold (& silver) price, people around the world have purchased physical gold from gold & silver exchhanges. The exchanges are all mostly out of stock now. The US mint looks like it will have a record month of gold coin sales, currently at just under 200,000 troy ounces sold . I personally went to a couple popular gold & silver exchanges in my local, and their shelves were as bare as I've ever seen, they had no silver rounds, no silver eagles, no Americal Eagle/Krugerand/Maple 1 toz coins... they just had a little junk silver (older US coins that were minted with 90% silver), and a few 10oz silver bars. Of course they did have some coins with numismatic value... but for protection of wealth people don't look for collector's stuff, they look for bullion.

I've also read rumors that some bullion banks are no longer delivering their allocated accounts, and that the futures market, for example the comex, is refusing delivery. GLD of course is just plain paper, it explicitly says it would never deliver.

Post 55

Thursday, April 25, 2013 - 10:36am

They also increased the margin on futures contracts.

Post 56

Thursday, April 25, 2013 - 4:12pm

It sounds like short-term moves in the electronic markets for gold, and strange politics (Goldman Sachs sell recommendation, for example) drove down the 'price of gold' in a way that is not only unrelated to physical gold's supply, but in opposition to the commodities actual supply/demand ratios. If that's the case, then the reality of physical quantities will reassert itself and makes me think the future prices will end up driving past the old highs - even before the massive inflation that might be ahead of us.

It is a divided market - not just physical vs electronic, but divided where some people are hedging against fundamentals and others are doing short term speculations on anticipated price changes. These different groups of people think very differently and react to very different buy/sell signals.

Post 57

Thursday, April 25, 2013 - 11:37pm