Posted on 11/20/2013 11:56:27 AM PST by CivilWarBrewing
I checked the stock market today and noticed it's down. But I also noticed that precious metals appear to be tanking. Gold is at $1245/oz and Silver at $19.85/oz.
What's going on here? Is J.P. Morgan or some other major player manipulating the precious metals market?
Actually the ramp in PM’s was predicated on fears of inflation/hyperinflation. Basically QE infinity. It’s counter intuitive in a way because many of us have been taught that PM’s were a good hedge against market collapse. They are not. They are a good hedge against monetary collapse. The fed trimming bond buying is USD bullish but is bearish for just about everything else.
sell offs are usually due to someone with substantial holdings being in need of cash... unless the unit of measure, the dollar, is getting stronger.
is the dollar getting stronger? by itself... no. in comparison to other currencies... it’s a toss up.
and of course there is outright manipulation
Same reason gas prices are down - no demand.
That’s how sick the economy is at this point. There’s no inflation because there is no economic activity to speak of. Obama just cut off any chance of banks assisting in future crises too.
There is a fire science principal called ‘backdraft’. It’s when a fire sucks all of the available oxygen out of the room, but all of the heat stays.
Some poor slob opens the door, and the rush of fresh air creates an explosion.
There are RECORD fiat dollars sloshing around the world, with literally nowhere to land.
What is scarier than what we have now is an honest-to-goodness economic recovery. That sounds weird to say, but I think the first sign of real recovery and you will have a torrent of dollars chasing commodities first, which will drive up the price of durable goods. Wages won’t be able to keep up, because both hiring and wages will lag too far, and you will get a giant mess.
It’s funny, but I think to an extent that maybe the Obamacare rollout was planned. You spend three years, $700M, and you hire Oracle to do it on top of that. The website isn’t hard to do, at all, either.
Anyway, the oxygen has left the building, but the heat behind the fire remains.
Look for ONGOING manipulation of CPI and unemployment stats by the USG.
I think, on a bipartisan basis, there has been a decision that the fate of the world’s economy is in so precarious a position that it justifies cooking the books until they can figure out a way to unravel it, if indeed that’s at all possible.
2 and 2 stopped adding to 4 around 2005, and they haven’t added to 4 since.
Bitcoin collecting: Now there’s a new hobby!
Why are you blaming JP Morgan? They just got shaken down by your president to the tune of $13 billion.
Metals generally move contrary to the stock market. Stocks have been up because the Fed’s QE has been holding interest rates down. That’s been driving the price of metals down as well.
http://www.freerepublic.com/focus/f-news/3093599/posts
Fed is meeting and is rumored to be tapering off on the money printing.
Gold is on sale.
My thoughts are -
that we are watching the “paper” market in metals. The physical - actual “hold it in your hand” market is tighter than a drum.
China, Russia, and other countries are grabbing all the physical they can get, and rumors are strong that the gold held in the west (think Fort Knox, and the TBTF banks is gone.
There will come a point when the music stops and when everyone rushes to claim the physical gold they think they own, they will find that they have nothing but a paper claim. At that point, the paper price will have no meaning.
No-one knows when that moment will come. Some are speculating that it could be soon, maybe this coming year. People will lose faith in the paper currencies, and the wealthy already have. See recent articles about the exploding prices being paid for rare paintings, gems, and other valuable tangible assets.
Is the water in this pot getting hot, or is it just me?
This article, and the comments below it, are worth everyone’s consideration.
http://www.tfmetalsreport.com/blog/5257/28-miles-ages
“To a large extent, the value of gold is perceived and not really based on actual worth”
Like the U.S. Treasury notes in your pocket? The ones valued FAR more than their cost to produce, even though they are backed by NOTHING, not even their cost to produce?
“Gold is not an “investment”, it is an “insurance policy” of last resort! Always has been and always will be! “
Not really. For thousands of years gold WAS money. Period.
A slowing of the economy [if that's possible from a dead-stop] would cause people and businesses to cut spending which would ease inflationary pressure.
“I think a lot of us believe that it will end in runaway inflation, but it will be preceded by deflation. I see these drops strictly as buying opportunities.”
I think you are probably correct. I simply don’t see any sort of deflation lasting very long when the Fed can instantaneously “print” an infinite supply of “money” at will. Here’s how it will work:
1. Market collapse of some sort occurs. Trillions are lost.
2. The next day: Fed “prints” trillions to make up the loss by buying up all the collapsed worthless securities.
3. “Problem Solved”
Q.E.D.
You are very warm and your skin is starting to blister. The talking heads keep telling us there is no inflation. They are printing counterfeit money every month at a rate of $85 billion a month. I’m not sure how much has been printed so far, but it should be in the trillion level. These fake bills are buying debt so the Chinese won’t have to. They can’t force us to cough up the money early, so the FED is in complete control. At some point, however, this debt will come due, and the money will become, “in circulation”. The only way to stop it would be to take dump truck full of money and burn it. Inflation is written in stone, we just don’t know when for sure. The GLD ETF is allegedly supposed to have paper representing physical gold, but how do they know where it is and how much? If people, not governments, especially the US, own the physical gold, how will the ETF satisfy the demand if everyone runs to the window at the same time? What if people demand their gold and China owns it? Their are so many chances for a run, it almost is inevitable at some point.
Agree with your premise.
Timing is everything.
That’s what I can’t figure out....
Gold Market Halted For 2nd Time Today Following FOMC Minutes Monkey-Hammering
But I prefer real estate (land). I can actually use that.
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I do for sure believe in runaway inflation, there is no way to avoid it. We will have high inflation and likely runaway inflation however there could be some control over how high the inflation is. Right now the government is holding the economy together by having very high unemployment. Having unemployment insurers that people hold onto their money, as soon as they spend it however prices will go up. There is a lot of pent up demand right now but people are afraid to purchase anything.
There has never been an economy in the history of the world who once having gone to Fiat has been able to survive without going through runaway inflation. The reason for this is that government leaders always want to spend more money than they have so they create money out of thin air, this always does an economy in. It is simply a matter of when.
Inflation is simply a form of tax. Our federal government spends 40% more each year than it takes in in taxes. The government will either have to default or pay that back with increased taxes. Societies will not stand for taxes much higher than 50%. Right now in the United States our taxes are already higher than 50% for at least half of our people but much of it is hidden. We have sales taxes, we have property taxes, we have excise taxes, we have unemployment insurance taxes, we have social security taxes, we have income taxes and we have inflation. Now we have a new medical tax.
The government is having to perform a balancing act. Every dollar they give away in welfare is spent right away. The people who get welfare don't worry about saving because Uncle Sam is saving for them. But as old people are starting to find out Uncle Sam is allowing payments to Social Security recipients to go down, down, down. Old-timers will be in trouble soon. The inflation adjustment for the last several years has been in the neighborhood of 1%, if anybody believes that inflation is only at 1% I want to talk to them about some Florida swampland.
My advice is to hold onto your precious metals, buy some more every chance you get. Precious metals are not an investment they are simply a safe place to put money that will never be completely destroyed. The government can change dollars to some other currency. They can make you turn in your dollars and exchange it for something else. No matter your precious metals will still have value. The government could make you change your money to something new and have a limit on how many you can turn in, no matter your precious metals will still have their value.
In the event that we have runaway inflation your precious metals will simply inflate in value also. Precious metals will Likely never purchase more oil, coal, titanium, tungsten or any other precious commodity at a higher rate than it did when you bought it, but if the value of dollars goes crazy down your precious metals will protect you.
Unfortunately many people perceive the value of real estate as a hedge against inflation, it is not.
Real estate is an investment with income production possibility. If you have to finance a real estate purchase it is a gamble that the markets will hold out until you can get your “investment” paid for. Once your investment is paid for you don't care about the evaluation or saleability of it, it is for income only. When inflation is high rent is harder to collect, nobody has extra money, everybody is just trying to live.
When an economy suffers runaway inflation nobody has enough money to purchase all they want to purchase so they purchase the commodities that they need to survive. Since all their money goes to food and fuel nobody will be buying real estate except for people who have a lot of precious metals saved up. Real estate will be cheap and precious metals will have a lot more value, people who have precious metals will be some of the only people buying real estate.
I'm afraid some tough days are coming.
The drop in futures following the Fed's 2:00PM announcement demonstrates that less QE results in:
- increased long-term interest rates moving money to bonds; and
- lower money supply increases, inflation and printing,
both weakening gold.
When the Fed acknowledges that it cannot wind down QE, the reverse will hold.
The interest rate impact is short-term; the inflation impact is long-term.
“Why in the list of inflationary forces did I not mention gasoline prices and home heating fuel prices? Well, I have to believe that to a certain extent, I know that’s an unusual situation, prices are not so much the cause of inflation – price rises – they’re the result.”
~ Ronald Reagan
Increasing the money supply at greater rate than economic growth causes inflation, not deflation.
When I say “real estate”, I’m talking about the 32 acre “compound” I’m working on in rural central KY with two streams, tons of forrest, farming ground and a natural well.
You can live there almost for free, if it’s paid for.
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