Gold 1000 – Trading and Market Notes Sept 3rd-9th
What does gold 1000 mean at this point in time.. Are we going to move into the “danger zone” or is this business as usual. Is the China story really credible as a flight to safety play. In the US funds are locked down into the USD. In terms of gold we have a “hot money eft” that has supplanted physical gold ownership. This hot money adds quite a bit of volatility in gold. No one is talking about the “law of maximum ruin” where we whipsaw quickly into a period of failing markets.
Duration : 0:9:59
This entry was posted on Wednesday, March 3rd, 2010 at 1:11 pm and is filed under market trading. Follow the comments through the RSS 2.0 feed. You can post a comment, or leave a trackback.
Mostly I look at …
Mostly I look at money supply.. There are trillions of “net neutral” instruments that are not considered money. If they are not risk neutral they are a liability that has to be paid. There is not enough money supply to cover the potential losses on deriviatives. My next presentation covers this point. Thanks for watching btw and the support.
March 3rd, 2010 at 1:11 pm
You cannot have ” …
You cannot have “bi-flation” for a prolonged period of time.
What people do not understand is that consumer price inflation/deflation lags asset price inflation/deflation.
So you need, in my opinion, to watch the asset prices to know where consumer prices are going.
This could be a flaw, in my opinion, with the inflationist’s argument. Just like in the stock market, you need to look beyond the now.
March 3rd, 2010 at 1:11 pm
That is certainly a …
That is certainly a potential… One has to question why the US has a huge oil surplus presently; yet the consumer prices of gasoline have not gone done.
March 3rd, 2010 at 1:11 pm
are we not in a …
are we not in a bi-flationary environment with asset prices (cars, houses etc) plunging and inflation in essentials like food and energy etc?
March 3rd, 2010 at 1:11 pm
Thanks for the …
Thanks for the support.
March 3rd, 2010 at 1:11 pm
I have embraced the …
I have embraced the argument that we are in a deflationary spiral and think that it will continue for quite some time. I’ve finally been talked out of the inflation scenario – maybe much further down the road. You talk about a imminent future of hyperinflation, and Faber argues for that in a few years? What is a poor amateur economist supposed to do? Personally, I think there are some serious rogue waves out there and all bets will be off.BTW – love the videos – erudite, sober, and apolitical.
March 3rd, 2010 at 1:11 pm
I don’t see the …
I don’t see the demand for loans by the public increasing for quite some time. This demand was high due to baby boomers wanting things like houses, cars, etc… Since they are retiring, I would consider their spending cycle over. Who is going to take over their demand for easy money? I don’t think it is their children b/c they have already borrowed too liberally & banks will not lend anymore to them. I recently graduated college & several of my friends graduated with over a 100k in loans.
March 3rd, 2010 at 1:11 pm
They can increase …
They can increase reserves all they want but if people aren’t willing to borrow then how are banks going to pyramid those reserves?
March 3rd, 2010 at 1:11 pm
The #1 way to …
The #1 way to increase the money supply is thru F.R. Open Market Purchases. The purpose of this operation is to increase bank reserves. The #2 way to increase money supply is thru creating loans once the reserves from Open Market Purchases have reached the requirement. They can increase reserves all they want but if people aren’t willing to borrow then how are banks going to pyramid those reserves? They 1st need to get banks to start lending again. Will there be willing participants after this?
March 3rd, 2010 at 1:11 pm
Eventually…….
Eventually…….
March 3rd, 2010 at 1:11 pm
I don’t get people …
I don’t get people like Peter Schiff who believes in hyper-inflation and also for the stock market to go down. Like what happened in the Weimar Germany, if you have hyper-inflation then wouldn’t the stock market sky rocket?
March 3rd, 2010 at 1:11 pm
I was computing …
I was computing targets from a slightly higher base than in the monthly chart
March 3rd, 2010 at 1:11 pm
tinyurl (dot) com / …
tinyurl (dot) com / lrz7o6
Pls see a monthly chart of gold. If this is wave C down they are showing targets of 642. This would be where to add. I was computing 696 btw.
March 3rd, 2010 at 1:11 pm
…now i’m glad i …
…now i’m glad i bought a little bit of gold:)
March 3rd, 2010 at 1:11 pm
If you notice that …
If you notice that last box is a hybrid.. (between hyperinflation and currency crisis). I could see some international non-acceptance of our currency as a ramification and result of our policies (or lack of a policy)…. Perhaps a scenario where we bottom the post depression-US economy tries to pick up and seeks imports namely oil or commodities, interest rates stay low, and we fail to build out the kind of structure we would need for the future.
March 3rd, 2010 at 1:11 pm
Warren, how do you …
Warren, how do you propose we move from a period of deflation to a period of hyperinflation without (1) jobs (2) velocity (3) restoration of credit. In a system that is largely based on credit where credit has collapsed, I’m having a tough time seeing a rollover to hyperinflation. I agree with your deflation outlook, I just don’t see an end to it as you do.
March 3rd, 2010 at 1:11 pm
I have friends …
I have friends heavily into gold and silver ETF’s…trading paper for paper for those commodities in my opinion isn’t smart right now.
March 3rd, 2010 at 1:11 pm
That is a danger …
That is a danger zone type observation.
Where we have an economy that works and then it does not.
At some point you worry about sourcing the things you need.
March 3rd, 2010 at 1:11 pm
We see HK moving …
We see HK moving gold stored in London.. That is a testament to the lack of solvency of the UK. China getting out of Dollar; and into IMF is also long term dollar bearish. Allowing people to buy gold in banks is also a good story. In the short term these news items can actually have an opposite reaction (buy on rumor sell on news)
MAIN POINT->The tides of paper gold may be more relevant short term.
Long term dollar is cooked….I would no be surprised to see 32000 dow and 5000 gold.
March 3rd, 2010 at 1:11 pm
interestingly i …
interestingly i happen to have a friend who is a barge captian on the mississippi…they only haul fertilizer on the mississippi. anyhow…there has been a 40% decline of fertilizer shipment since last winter due to the fact that banks arent loaning money to farmers for fertilizer and seed. Obviously there is going to be huge food inflation and if you figure in drought and unseasonal cool weathers effect on corn combined with ethanol production Id be looking hard at agg stocks
March 3rd, 2010 at 1:11 pm
Question: Ive read …
Question: Ive read that China is allowing and encouraging their citizens to own gold as an investment for the first time and that China just purchased 50 billion dollars of IMF SDRs …do you have an opinion regarding how this effects the price of gold short term and the value of the dollar long term?
March 3rd, 2010 at 1:11 pm
Your purchasing …
Your purchasing power will be constant….
And you will not be reliant on a bank standing between you and your wealth. (price may not matter all that much.))) In the US we will have a barrel of problems…
March 3rd, 2010 at 1:12 pm
INR is an …
INR is an interesting place… recent history and all.
Well gold will keep its purchasing power. I think much of the paper gold could sell off quickly.
In a deflation we would retrace to 696, or (even 430….)
On the way to hyperinflation we have to see a break of 1126 or so. (then we would be looking at 1822)
I think we are going to see both scenarios….. “The law of maximum ruin” will get people selling at the low and buying at the high.
Better to add gold and silver.
March 3rd, 2010 at 1:12 pm
Warren,
Great …
Warren,
Great video and I completely agree with your outlook. As all of the debt is collapsing and no credit expansion is taking place than the dollar will get stronger. The FED is trying to counter this collapse in debt by quantitative easing but there is no avenue for credit expansion. The FED has said it will end quantitative easing in October. I expect thats when we will see the dollar going up and the markets will go down.
March 3rd, 2010 at 1:12 pm
Warren once again …
Warren once again great video. Thank You. I have most of my funds parked in the INR outside the US. wating for me till I move there in May of 2010. Will i regain the about 20% i lost. Any ideas during the defaltion part of recouping or stay put and will make up the money during hyperinfaltion phase. What price do you see silver and gold at the hight of deflation. Thank you for you time.
March 3rd, 2010 at 1:12 pm