Posted on 09/28/2011 1:57:20 PM PDT by blam
Actually there was a reason. There was no hopium news from Europe to spur prices.
The US Dollar Index is strengthening as we enter into deeper deflation - not decreasing. It only decreased earlier because Western Europe went deflationary. The US Dollar Index is simply a formula.
Look for oil to continue dropping as we go along. I would not be at all surprised to see $35/barrel oil in the future.
We are but a couple of defaults away from it being apparent to everyone. Once the contagion starts there is no way to stop it until it has cleared out the system. It will move far more rapidly than institutions can respond and it will create fear of rare intensity for everyone who is owed a dime.
If you are holding anything besides cash, convert it now.
Basic services and commodities will continue be in strong demand as the developing world grows. We will see inflation with these asset classes. However, discretionary income and wealth is declining in the US and Europe reducing demand for discretionary spending in the middle class and upper income classes (excluding the truly wealth 20x millionaires and above). Basically, we are seeing equalization of the middle classes throughout the world because of globalization.
The US can grow the middle class again if it returns to free market principles by electing conservatives.
Cash or even bonds are good hedges against deflation...just keeping the same amount of dollars in an environment where the value of each dollar increases dramatically is like making money. The nice thing is it is tax free...
Exactly. Short-term t-bills are the place to be in my opinion.
Those with existing debt are going to find it much harder to meet their obligations as wages drop due to a strengthening US dollar.
I expect to see gold under $600/oz. and silver under $10/oz. once this fully hits.
Because we have to import so much of our raw materials (oil) that are low in the economy’s hierarchy of inputs, when oil goes up, most everything that is tangible goods has to go up sooner or later.
The lead time to see commodities decreases in the consumer’s face are about six to nine months. If trends continue that show commodities starting to sell off in the last three months continue, you should see the results early next spring.
See?
As in lower prices?
Yes, as in lower prices. The price of oil and copper are indicating that demand is slacking.
The other wild card at this time is China. It appears that China’s economy is headed for a significant slowdown, and they’ve been the big driver of commodity prices (both speculative and real) for the last couple of years. Then the QE2 from the Fed plumped up commodity (and stock) prices.
QE2 is done, there isn’t going to be a QE3, just “Operation Twist” which will probably reduce bank lending. Couple that with a slowdown in China and we should see prices fall down at the consumer level in six to nine months.
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