Au and the direction of the market -->gold does better in deflation?!
raylopez99
expert on money, once pointed out (I think it was him) that gold
actually does better during deflation (!) rather than inflation.
Question to ponder--where is gold going if:
1) market crashes
2)market declines slowly
3) stagflation (regardless of market)
4) inflation ("")
5) deflation ("")
6) market rises.
The way I see it, gold rises in ALL of the above scenarios.
Can it be said that betting against the US dollar and buying gold are
the only two sure thing bets left in this world?
RL
Dr Tormento
@n59g2000hsh.googlegroups.com:
> 1) market crashes
> 2)market declines slowly
> 3) stagflation (regardless of market)
> 4) inflation ("")
> 5) deflation ("")
> 6) market rises.
>
> The way I see it, gold rises in ALL of the above scenarios.
Since there are no other possible scenarios, you better think again.
BrunoR
your pocket, or bullion in your home freezer, versus only bookkeeping
entries on someone else's computer system. You probably have not
considered all possible scenarios?! ;-) Think again!
Btw. Why, for chrissake, would you bet against US dollar at this time?
I have no inclination to explain, IMHO, it doesn't make economic sense.
Dr Tormento
$4c36...@roadrunner.com:
>
> Btw. Why, for chrissake, would you bet against US dollar at this time?
> I have no inclination to explain, IMHO, it doesn't make economic sense.
One of the most widely believed economic myths is that a currency's
value is linked to its trade deficits. Since there is a wide US trade
deficit, believers bet against the dollar. You're right, it doesn't make
sense.
Don Tiberone
> BrunoR <Bru...@nyc.rr.com> wrote in news:4622a947$0$5813
>
>
>
> > Btw. Why, for chrissake, would you bet against US dollar at this time?
> > I have no inclination to explain, IMHO, it doesn't make economic sense.
>
> One of the most widely believed economic myths is that a currency's
> value is linked to its trade deficits. Since there is a wide US trade
> deficit, believers bet against the dollar. You're right, it doesn't make
> sense.
People bet against the dollar, because it's being devalued considering
the Fed keeps printing money out of thin air. How valuable can it be
when the Fed can print unlimited amounts of it? Makes perfect sense.
Also, if you believe a housing crash will lead to a recession or at
least a slowdown, then the Fed should cut rates, which mean the dollar
should go down.
Or, considering the US is screwing around with China right now, China
could easily dump all their dollar holdings in retaliation. Which is
why the dollar immediately started tanking as soon as the US began
talking nonsense.
Or if you believe there's no way in hell the US can pay off all it's
debt, that's yet another reason the dollar could tank. And the debts
continue piling up every day. Just the interest off that debt is
killing us. If things get out of control, eventually, we won't even be
able to pay off the interest. That's happened a number of times to
numerous countries, incidentally. And all their currencies collapsed.
Just pray it doesn't happen to the dollar. A good start, would be to
get out of Iraq. We've wasted enough money there as it is. All that
money we're wasting there could be put to better use, like alternative
energy. The faster we develop alternatives, the faster we can tank the
price of oil, and really hurt countries like Iran, Venezuela, and
Russia. But as it is, we're wasting money and lives in Iraq, while the
price of oil will likely continue going up. Both, are negative for the
dollar.
raylopez99
> Or if you believe there's no way in hell the US can pay off all it's
> debt, that's yet another reason the dollar could tank. And the debts
> continue piling up every day. Just the interest off that debt is
> killing us. If things get out of control, eventually, we won't even be
> able to pay off the interest. That's happened a number of times to
> numerous countries, incidentally. And all their currencies collapsed.
> Just pray it doesn't happen to the dollar.
Right you are Don Tiberone and wrong is Dr. Tormento.
Technically instead of trade deficit we should be talking about
current-account deficit, but for most countries they're pretty close
to one another.
The dollar bulls are betting on what a French economist in the 60s
(Rueff?) who worked for DeGaul called "Deficits Without Tears"--the
ability of the Fed to print money and because the USA was (and is) the
world's biggest consumer, and somewhat of a monopsonist (monopoly
buyer), the other countries had to take dollars and not complain, no
matter how worthless the dollars were--it's like the Spanish in the
15th century, when they discovered silver and gold in the New World--
for a while they could live large and fight expensive wars. But, as
the rest of the world (ROW) catches up with the USA, the US is no
longer the "only game in town", so countries can retaliate by not
selling to the US and/or asking for a lot more dollars instead of just
taking what's offered. THis was not possible in post WWII Bretton
Woods (besides the dollar being fixed, though that's not dispositive
to this issue). No longer does ROW have to take whatever worthless
dollars the Fed prints as payment. They can ask for more dollars.
Having said all of the above, the ROW boycott of dollars has not yet
happened. Witness the fact that the central bank of China is pretty
much, just like after WWII, taking whatever worthless dollars the Fed
Reserve prints at whatever low interest rates exist (the two factors
are related between China and the USA--exchange rates and interest
rates). THis, IMO, is why the dollar has firmed and not collapsed,
and why interest rates are so low. Let's hope our Chinese friends
stay "old fashioned" and continue this (foolish for them) policy. As
long as wage slaves in China are happy (or otherwise) to work for $1 a
day, and the China central bank is happy recycling dollars back to the
US government, this can continue for a long time. Who cares if it
results in China's economy becoming overheated, in misallocating
resources, in keeping the population poor (but employed)? Not our
problem.
If and when China starts becoming more assertive, this system, like
the infamous "Yen carry trade" (which is related and also a bubble not
yet popped), will collapse. And, just like any collapse of any
unstable system, the collapse is swift and unexpected (recall the dot-
com boom).
All the more reason to buy Au now when it's cheap--before it costs
$2000 an ounce...if not $10k.
RL
DaveR
"raylopez99" <raylo...@yahoo.com> wrote in message
news:1176734126....@q75g2000hsh.googlegroups.com...
But, as
> the rest of the world (ROW) catches up with the USA, the US is no
> longer the "only game in town", so countries can retaliate by not
> selling to the US and/or asking for a lot more dollars instead of just
> taking what's offered.
Nice acronym (ROW). Is it an R. Lopez original?
Dr Tormento
news:1176683222.3...@y80g2000hsf.googlegroups.com:
> On Apr 15, 4:08 pm, Dr Tormento <r...@togroup.com> wrote:
>> BrunoR <Bru...@nyc.rr.com> wrote in news:4622a947$0$5813
>> $4c368...@roadrunner.com:
>>
>>
>>
>> > Btw. Why, for chrissake, would you bet against US dollar at this
>> > time? I have no inclination to explain, IMHO, it doesn't make
>> > economic sense.
>>
>> One of the most widely believed economic myths is that a
>> currency's
>> value is linked to its trade deficits. Since there is a wide US trade
>> deficit, believers bet against the dollar. You're right, it doesn't
>> make sense.
>
> People bet against the dollar, because it's being devalued considering
> the Fed keeps printing money out of thin air. How valuable can it be
> when the Fed can print unlimited amounts of it? Makes perfect sense.
No, it doesn't. Every country in the world operates on paper money.
Saying the US is unique in printing money is absurd.
>
> Also, if you believe a housing crash will lead to a recession or at
> least a slowdown, then the Fed should cut rates, which mean the dollar
> should go down.
News of the housing slump is so old it can't possibly be an important
factor from here on out.
>
> Or, considering the US is screwing around with China right now, China
> could easily dump all their dollar holdings in retaliation.
No, they can't. There is no way on earth they can sell $1 trillion to
anybody "easily". Nor would they ever want to, since their economy is
very dependent on sales to the US.
> Or if you believe there's no way in hell the US can pay off all it's
> debt,
Another silly argument. Their no sane reason why the entire debt
should ever be paid off.
> And the debts
> continue piling up every day.
As a percent of GDP, the US budget deficit is one of the smallest in
the developed world.
>Just the interest off that debt is
> killing us. If things get out of control, eventually, we won't even be
> able to pay off the interest.
Not a chance of that happening in the forseeable (investment wise)
future.
raylopez99
> "raylopez99" <raylope...@yahoo.com> wrote in message
No, I stole it from a chess incident, where the then current chess
champion Garry Kasparov (arguably one of the best players ever, and
now a political dissident of sorts in Putin's Russia) played a
correspondence game against the Rest of the World, abbreviated as
"ROW". He won, when a unexplained MSN internet mishap prevented the
best move from being entered by ROW (though he probably would have won
anyway). BTW ROW was de facto the recommendations of a 15 year old
girl named Irina Krush. Details found here: http://www.anusha.com/row.htm
and http://en.wikipedia.org/wiki/Irina_Krush
Ray Lopez <--a chess opening BTW, though it also happens to be very
close to my real name
raylopez99
>
> > People bet against the dollar, because it's being devalued considering
> > the Fed keeps printing money out of thin air. How valuable can it be
> > when the Fed can print unlimited amounts of it? Makes perfect sense.
>
> No, it doesn't. Every country in the world operates on paper money.
> Saying the US is unique in printing money is absurd.
>
He is saying that paper money can become worthless, not that paper
money is unique. Kublai Khan's paper money certificates in lieu of
gold come to mind.
>
>
> > Also, if you believe a housing crash will lead to a recession or at
> > least a slowdown, then the Fed should cut rates, which mean the dollar
> > should go down.
>
> News of the housing slump is so old it can't possibly be an important
> factor from here on out.
Well, things do sometimes snowball...the Asian crisis of 1997 comes to
mind, which seemed to not happen overnight but took a few months.
>
>
>
> > Or, considering the US is screwing around with China right now, China
> > could easily dump all their dollar holdings in retaliation.
>
> No, they can't. There is no way on earth they can sell $1 trillion to
> anybody "easily". Nor would they ever want to, since their economy is
> very dependent on sales to the US.
Well, if trade wars continue, the Chinese, being a centralized entity,
could retaliate.
>
> > Or if you believe there's no way in hell the US can pay off all it's
> > debt,
>
> Another silly argument. Their no sane reason why the entire debt
> should ever be paid off.
Yes, but the workplace is getting older and social security shortfalls
need to be funded...
>
> > And the debts
> > continue piling up every day.
>
> As a percent of GDP, the US budget deficit is one of the smallest in
> the developed world.
Only because other developed world countries are in even worse shape,
hardly comforting.
>
> >Just the interest off that debt is
> > killing us. If things get out of control, eventually, we won't even be
> > able to pay off the interest.
>
> Not a chance of that happening in the forseeable (investment wise)
> future.-
Forseeable is the keyword.
All in all however I agree with you Dr. Tormento...for now. I'm still
buying Au however.
RL
DaveR
Details found here: http://www.anusha.com/row.htm
> and http://en.wikipedia.org/wiki/Irina_Krush
>
> Ray Lopez <--a chess opening BTW, though it also happens to be very
> close to my real name
>
>
sparked a long dormant interest.
Dr Tormento
@e65g2000hsc.googlegroups.com:
>
> He is saying that paper money can become worthless
Outside of total war, no developed country has ever had that happen.
> Yes, but the workplace is getting older and social security shortfalls
> need to be funded...
That won't happen for decades, far too long to effect currency trading
now. BTW, other countries are far worse off in that regard.
>> As a percent of GDP, the US budget deficit is one of the smallest
>in
>> the developed world.
>
> Only because other developed world countries are in even worse shape,
> hardly comforting.
Well, then why prefer those other currencies?
>
> All in all however I agree with you Dr. Tormento...for now. I'm still
> buying Au however.
I own some gold stocks, but not because of fears for the dollar. Anything
involving metals is hot now.
arthur
hard assets tank in a deflation and that includes gold
On 15 Apr 2007 03:51:39 -0700, "raylopez99" <raylo...@yahoo.com>
wrote:
raylopez99
> "raylopez99" <raylope...@yahoo.com> wrote in message
>
> news:1176754876.0...@w1g2000hsg.googlegroups.com...
> Details found here:http://www.anusha.com/row.htm> andhttp://en.wikipedia.org/wiki/Irina_Krush
>
> > Ray Lopez <--a chess opening BTW, though it also happens to be very
> > close to my real name
>
> Thanks for the interesting links, Ray. Or should I say Ruy? You may have
> sparked a long dormant interest.
You're welcome DaveR, it's my pleasure.
But beware: like programming, like hobbies of various sorts, like a
good book, even like sex, chess can be addictive. You can easily lose
your job, girlfriend/wife, etc if you become obsessed by chess (but
the good news is your Elo will really improve). Another practical
tip: study, play, and your game will improve...it's that simple. No
magic to it. Just make sure you play somebody or thing (a program)
200 to 300 Elo points stronger than you, which means you should lose
75% to 85% of the time; otherwise you won't improve. Finally, do NOT
EVER make a sacrifice of anything greater than a pawn. Ever. Only
players above 2000 Elo (I'm at the border of this--on a good day)
should ever sacrifice anything over a pawn. I've seen so many
beginners try and make an exchange sacrifice (trading rook for knight
or bishop, losing a piece) and go down in flames. Even in certain
lines of the Sicilian (an opening you should probably avoid as Black)
where this is permitted it's tough to win unless you're really good,
as in above expert). Or sacrifice a piece for nothing ("I was
thinking of strategy?!", "I was breaking up his pawns?!", "Masters do
this, so why can't I ?!"). (Aside: it's really cool when you get good
enough to trade your queen for two rooks--which actually is not a
sacrifice at all but wins a pawn, though most amateurs would never
make this trade since they don't know how to use their rooks--
connected--effectively). Always defend your pawns and pieces, never
leave them hanging. Always calculate a variation once--and don't go
back and recalculate. Never guess a move, simply calculate it. Chess
below the master level is 99% tactics, 1% strategy. Too many
beginners go down in flames trying to refine their strategy, instead
of their tactics (studying the middlegame for example, instead of the
opening and the endgame). Good books: Fred Reinfeld on tactics
(Dover reprints). He has a bad name compared to Jeremy Silman, but for
below the expert level he's fine and cheaper. OK better stop now,
you've got me started! :-)
Good luck,
RL
raylopez99
> bull shit
>
> hard assets tank in a deflation and that includes gold
Hey arthur, check out the link below. It says the opposite, but I
grant you this: TANK can mean decline, but I would argue gold
declines less than other assets during a high deflation.
RL
Bill Reid
Dr Tormento <re...@togroup.com> wrote in message
news:Xns9913A4108FC...@69.28.173.184...
What doesn't make sense is why you don't understand that NOBODY
believes that a currency's value is linked ONLY to its trade deficits. At
the very least the basic theory is that trade deficit currency outflows are
matched by investment inflows and thus a stable currency.
Of course, there are actually a few other factors involved, but if you
can't even keep two straight I don't want to confuse you any further.
I just think it's generally great that the average person gets so frustrated
by multivariate problems that they just give up and say nuttin' means
nuttin'
'bout nuttin' and try to play the markets using a series of idiotic and
disjointed "bets" that perfectly illustrate the classical bad poker player
"loose-scared" mentality. Just makes it easier for people who can
actually add 2+2 to make money...
---
William Ernest Reid
Post count: 554
Dr Tormento
@y80g2000hsf.googlegroups.com:
> I would argue gold
> declines less than other assets during a high deflation.
Better to hold cash.
As a rule, you should never pay attention to anyone who uses the term
"fiat currency". It's a sure sign of looniness.
raylopez99
> raylopez99 <raylope...@yahoo.com> wrote in news:1176802354.657930.218540
I agree. But I've studied the problem a bit more than the average
loon. Read books by Eichengreen (sic) of Berkeley and articles by
Robert A. Mundell on currency.
NOte the dollar is heading down again. The EU central bank seems
determined to make the Euro a new "gold standard". But I live in the
EU now, and know the economy sucks (I get my money from America--
running an online business).
Buy Au Dr T...you won't regret it someday (I hope it never comes, but
you never know).
RL
arthur
Like asking a soup company to rate soup as a food.
On 17 Apr 2007 02:32:34 -0700, raylopez99 <raylo...@yahoo.com>
wrote:
arthur
why is that "loony"
The alternative is to hold Swiss Accounts and move your currency to
another fiat currency OR gold.
On Tue, 17 Apr 2007 17:11:17 GMT, Dr Tormento <re...@togroup.com>
wrote:
raylopez99
> that link would be to a non bias economic site now would it?
>
> Like asking a soup company to rate soup as a food.
>
But soup is food Arthur! The Campbells slogan I think was once "Hmm
Hmm, soup is good food" or something like that. Also Hungry Man soup
('so thick you can eat it with a fork...but use a spoon')
RL
Gold to $2000 an ounce...eventually. (Never make a prediction with
both price and time specified I've read)
arthur
you have a reasonable target price ... however this is a global world
The old price in the 300 range was valid but then ignored inflation
due to the global bull market from 1980 to 2000. Current price is
most likely a catchup IMO.
a
On 18 Apr 2007 13:54:20 -0700, raylopez99 <raylo...@yahoo.com>
wrote: