Posted on 11/06/2007 4:44:12 AM PST by ml/nj
Bad debt goes for low prices which means higher yield or yield to maturity (minus default). Or, to put it another way, how does bad debt sales translate into interest rates in the overall market?
yitbos
Someone might have said that was the reason. Fact is China is already doing it.
China, Mainland had (3 months ending in March 2007)a net purchases of LT Treasuries of -$1.3b, net purchase total of US securities of +$41.7b.
(3 months ending in March 2007) net purchase of LT Treasuries +$13.7, total purchase of US securities of +$43.6.
Source: http://www.treas.gov/tic/snetusq.txt
yitbos
Way ahead of you. Taxed at 28 per cent, gold and silver are considered ‘collectables’.
There are a lot of misconceptions about what ‘legal tender’ and cash means.
A business is perfectly within their right to refuse cash. They are free to specify the form of payment as well, whether seashells or wampum, whatever. Legal tender means that it has to be accepted for payment of a debt, which isn’t the case prior to the sale.
No VAT on gold bullion in europe. Silver, yes.
The point I was trying to make was that Gold like any other investment is only worth while if you sell it at a profit. The gold bugs try to convince me I should be using it instead of Dollars because Dollars are worthless.
In the mid 1970’s I went on a tour of a gold mine in Cripple Creek, CO. I saw huge gold ore veins unmined. The tour guide who was a former employee of the mine told us that the reason the mine was closed was because they needed the price to be about $200/oz before it was profitable to mine it. The supply was readily available, but there was no need to get it out of the ground.
If I buy Gold today, at it’s current price I would be looking for a short term move (less than 12 months) of at least 15% before I would dump it. $673 - $945 is the range, I think that I am more than likely not see that range right no, so for me it doesn’t make sense. You are one of the smart ones who got in at the current “right time”, bless you and good luck.
Everyone seems to be ecstatic with the new repriced gold numbers, but if you think about it they are “treading water” insofar that those increased nominal number of dollars ( and provided one sells at these higher numbers) continually seem to buy less heating oil, less gasoline, less wheat, etc. Too, gold is considered a “collectable” and taxed at 28 per cent.
ML/NJ
mon·ey (m¾n“¶) n., pl. mon·eys or mon·ies. 1. A commodity, such as gold, or an officially issued coin or paper note that is legally established as an exchangeable equivalent of all other commodities, such as goods and services, and is used as a measure of their comparative values on the market. 2. The official currency, coins, and negotiable paper notes issued by a government.
bookmark
ML/NJ
I saw a chart the other day showing spare capacity for OPEC nations. Only SA and UAE had any meaningful capacity. I’m not an expert on the oil sector, but from what I’ve read, a number of large fields are projected to go into decline soon, if they haven’t already. I get the gut feel that supply will be an issue. Oil is higher now, on an inflation adjusted basis, than it was during the 70s crises, and yet we don’t see much of a reaction in the economy or in consumer behavior. I know the economy is less sensitive to oil than it was back then due to manufacturing being a smaller percentage of total, but still it seems a bit strange.
I don’t disagree with you. My point was more toward how the market reacted to the announcement, rather than any change in policy. It shows the market is quite sensitive to this issue, and lends support to the idea that the fall in the USD is being driven by the CAD and foreign USD reserve levels rather than interest rate differentials.
There was nothing smart about it. Gold was sitting between 250-300. The potential for a big downside move was very small, and the potential for a big upside move was very great. The "expected value" of such a distribution was significantly greater than the actual price of gold. Other factors were in favor of an upside move. The US political/financial picture was a mess. The government was printing credits on anything they could find. Someone commented that if he dropped a roll of toilet paper near the Fed, when he retrieved it he would have a wad of dollars. Everyone was "beating up" on gold, and it seemed that the price was being depressed by political shenanigans. Back then the decision to buy a leveraged gold fund was a simple one.
Today, the gold environment is much more complex. There is significant downside risk and significant upside potential. The "expected value" may now fall in the center of a very wide range. The herd is stampeding to gold without a clue as to the heightened risk. Even though the long term trend has been up, this could result in a sharp move up followed by a sharp move down. Today, Gold is definitely not a investment for the feint hearted.
Wrong!!!!
It's a monetary exchange, not a capital gain. The only way that it could be viewed as a taxable event is if you personally had caused the fluctuation in order to achieve the gain. That would be hard for the IRS to prove.
Thanks for that. Sounds reasonable to me.
LOL, now I won’t have to go back and amend my tax returns.
Agreed. My point is that someone with access to the press and an interest in a move one way or another made a big deal out of an old story.
yitbos
Yikes! Up another two bucks! Sell! Sell! No, wait...Hold! Hold! LOL!
One can start looking for a top in gold when M3 stops growing at 3 times economic growth. And yes, I know the fed doesn’t publish M3 growth rates anymore (which was a good signal to buy gold). If one wants to know what the number is one may look in the back pages of the Economist. When M3 is growing only slightly faster than the economy one should be out of gold. I don’t expect to see that any time soon.
Summarized from J.K Lasser's "Your Income Tax 2006"
Frankly, this does not have much pressure on AAA rates, but what it does do, is steepen the credit quality curve. The spread between treasuries and junk debt expands with changes in attitude about default risk, as well as supply. Attitudes about corp debt have obcvioulsy gotten worse, and the supply gets huge when C and MER may bring 1.5t to that arena. Throw in all the major banks, regional banks, then the insurnace companies... Supply enough to choke on. Now, at some point, that becomes a really good deal, for buyers. I can explain more in detail why this becomes such a good deal, if you want.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.