The dollar, precious metals, and the 'other' invisible hand

[Guest]

Re: The dollar, precious metals, and the 'other' invisible hand

Thanks for the guidance here Bart. My totally whacked out "US dollar (and stock markets!) is gonna soar" bull pundit must be smoking some more of the hoochy. He sees another nasty swoon in the PM's upcoming, right at the end of this week. Possible fall of gold to "well below" $780 and silver (once again, I feel like retching) to $9.80

This is part of what prompted me to (finally) sign up and become a 'card carrying" iTuliper. I guess I needed that "cattle prod" jolt to wake up and smell the (lime green) coffee here! Kind of like trying to grab hold of the mast on the boat, in a force 8 gale. If iTulip is telling me "it ain't gonna break $780" then I'm accepting this advice gratefully. Meantime, we'll see whatever we see.

BTW, this "guru" is claiming we are staring at a multi year bull market in the dollar and a multi-year "outperformance" of the US stock markets over every other bourse in the world. It's madness. I gotta dump this guy by next Janury for sure - unless he's turning out to be right! :eek: :eek: :eek:

If he were right on that call, we'd be looking at a multi-year bear market for the PM's. Goes to show - there is nothing out there that can give one real peace of mind. Nothing. The markets are going to maul you and age you, any way you approach them.

Could we see real deflation - of course. But I remain in the camp that believes if it happens (far from an assured scenario), that it will only be for a very short time period.

[bart]

Re: The dollar, precious metals, and the 'other' invisible hand

Thanks for the guidance here Bart.

My pleasure Lukester, but fair warning - I'm at least as uncertain and confused as EJ and probably more so. The cross currents and the legion of mixed signals are rougher to decipher than I've ever seen them.

My trades the last few months have been both less frequent and have used less leverage than at any time since I got back up to speed in 2005 or so. I won't exclude a break below $780 gold either, but temper that opinion with me being a short term trader too.

And congrats on signing up to be part of the in crowd as a subscriber and true cognoscenti... ;) ... there really is a difference in those areas.

[Jim Nickerson]

Re: The dollar, precious metals, and the 'other' invisible hand

Thanks for the guidance here Bart. My totally whacked out "US dollar (and stock markets!) is gonna soar" bull pundit must be smoking some more of the hoochy. He sees another nasty swoon in the PM's upcoming, right at the end of this week. Possible fall of gold to "well below" $780 and silver (once again, I feel like retching) to $9.80

This is part of what prompted me to (finally) sign up and become a 'card carrying" iTuliper. I guess I needed that "cattle prod" jolt to wake up and smell the (lime green) coffee here! Kind of like trying to grab hold of the mast on the boat, in a force 8 gale. If iTulip is telling me "it ain't gonna break $780" then I'm accepting this advice gratefully. Meantime, we'll see whatever we see.

BTW, this "guru" is claiming we are staring at a multi year bull market in the dollar and a multi-year "outperformance" of the US stock markets over every other bourse in the world. It's madness. I gotta dump this guy by next Janury for sure - unless he's turning out to be right! :eek: :eek: :eek:

If he were right on that call, we'd be looking at a multi-year bear market for the PM's. Goes to show - there is nothing out there that can give one real peace of mind. Nothing. The markets are going to maul you and age you, any way you approach them.

Luke, are there two of you using the screen name of "Lukester" or is the one of you suffering some sort of a multi-personality disorder?

Why just the other day you advised poor olivegreen to:

Olivegreen -
.
.
Ignore the deflations, buy a really sensible portfolio rigged for inflation and just sit on it, like the supremely patient Horton the Elephant. And the best part is saved for last. You are thereby delivering yourself, from the constant, soul consuming and spirit-pinching angst of constantly rejiggering your positions to fend of these catastrophic end-of-time deflationary interludes. What you do with the rest of your life is far more valuable that what you do with your investments.

And it just so happens that this is the era's hidden great gift to us, among all the other miseries it doubtless will also deliver - the simplicity of the remedy will allow us to get on with the rest of our lives. The investments for the next 10-15 years are really simple. Rig for inflation, and forget about it.

Are these not inconsistencies in your thinking and advice, or does the problem lie with my failing to understand what you are writing?

"Now have a cold beer and relax, mate," before you set about to reconcile this dichotomy.

[Guest]

Re: The dollar, precious metals, and the 'other' invisible hand

Here Jim -

This is for Olivegreen. Here's some "boosterism" for that flagging and increasingly threadbare "long term investments rigged for inflation" idea (from an iTulip contributor that "keeps contradicting himself") I think you've read a little of this guy's work too? I may not make any sense, but that David Bensimon character sure seems to have some lucid ideas as to where this is all headed, eh? ;)

INTERVIEW WITH BENSIMON OF POLAR PACIFIC (great holiday weekend listening!)

[ where are those wayward and frisky metals going to go eventually, hm? ]

[metalman]

Re: The dollar, precious metals, and the 'other' invisible hand

Here Jim -

This is for Olivegreen. Here's some "boosterism" for that flagging and increasingly threadbare "long term investments rigged for inflation" idea (from an iTulip contributor that "keeps contradicting himself") I think you've read a little of this guy's work too? I may not make any sense, but that David Bensimon character sure seems to have some lucid ideas as to where this is all headed, eh? ;)

INTERVIEW WITH BENSIMON OF POLAR PACIFIC (great holiday weekend listening!)

[ where are those wayward and frisky metals going to go eventually, hm? ]

i'm attached to my gold, too... not looking forward to the day i'll need to sell it but surely that day will come.

[Jay]

Re: The dollar, precious metals, and the 'other' invisible hand

Could we see real deflation - of course. But I remain in the camp that believes if it happens (far from an assured scenario), that it will only be for a very short time period.

I was under the impression that, at least from EJ's point of view, that once you hit a zero bound mark and get into outright deflation, that it is self-reinforcing and difficult to pull out of, like a plane in a flat spin and that Bernanke would do everything he could to keep this from happening. Dis-inflation yes, deflation, no. Do I understand this right? And if so, how much of a possibility do you see in the deflation senario?

[metalman]

Re: The dollar, precious metals, and the 'other' invisible hand

I was under the impression that, at least from EJ's point of view, that once you hit a zero bound mark and get into outright deflation, that it is self-reinforcing and difficult to pull out of, like a plane in a flat spin and that Bernanke would do everything he could to keep this from happening. Dis-inflation yes, deflation, no. Do I understand this right? And if so, how much of a possibility do you see in the deflation senario?

google 'disinflation then lots of inflation'

years ago itulip said the fed and treasury will not sit on their hands and watch inflation fall to zero... are committed to reflation... and that is EXACTLY what happened... contrary to the deflationist theory that they 'can't' or 'won't' do anything.

events have totally discredited the deflation theory. if anything, itulip did not go far enough. but markets still don't get it... they think deflation is coming.

richard russell says watch out for deflation... again. here's russell exactly 4 yrs ago...

August 28, 2004 -- I've been focusing on the movements of the commodities. They all appear to be under pressure. Declining tops, declining tops everywhere in commodities. At the same time the dollar is actually turning strong. And the bonds continue to creep higher. What is all this telling us? It's telling us that the Fed, despite its frantic money creation and low interest rates, is failing to hold back the forces of deflation.

Yes, it's incredible but with twin US deficits adding up to a trillion dollars a year, the forces of deflation are active and more powerful than the actions of the Fed -- more powerful than the action of all the central banks taken together.

The simple, basic fact is that there's too much supply in the global market, and not enough demand. That is the classic recipe for price deflation.

The picture is changing very slowly, very subtly, unnoticed by most analysts. But I'm convinced that Greenspan is well aware of what's happening.. Greenspan has studied the Japanese situation carefully, and Greenspan knows that the great unseen monster of deflation is still very much alive. I also believe Greenspan has told George Bush about the specter of deflation, and for this reason you will see Bush avoid any talk about the enormous budget deficits.

The truth, the unspoken truth, is that Bush wants deficits. Bush needs deficits to fight the forces of deflation. The easiest way to produce huge deficits is via defense spending. You can spend your bloody head off in defense and who can complain? Who dares complain, particularly with the nation in constant danger from terrorists?

So watch for a coming huge build-up in government deficits -- most of it stemming from defense spending. Furthermore, Bush will constantly harp on the terrorist danger. This will allow him to spend and spend more on defense -- with any objectors branded as being anti-patriotic and close to treasonous.

Kerry doesn't see or understand the situation. Nobody's told Kerry about the danger of deflation. Few people know about it. Kerry's talking about cutting the deficits. This is the path to economic disaster, as counter-intuitive as that seems. Subscribers who have no idea of what I'm talking should read Richard Koo's brilliant book, Balance Sheet Recession.

I now believe Kerry will lose the election. He'll lose because he doesn't see the picture, and therefore he'll be talking the wrong talk. And advocating a policy of walking the wrong walk.

The major problem entails the underlying forces of deflation. It's the deflationary background, I believe, that is holding gold and silver back. Forget manipulation -- the precious metals sense deflation.

how many times do these guys have to be WRONG before people stop listening to them? :eek:

[bart]

Re: The dollar, precious metals, and the 'other' invisible hand

I was under the impression that, at least from EJ's point of view, that once you hit a zero bound mark and get into outright deflation, that it is self-reinforcing and difficult to pull out of, like a plane in a flat spin and that Bernanke would do everything he could to keep this from happening. Dis-inflation yes, deflation, no. Do I understand this right? And if so, how much of a possibility do you see in the deflation senario?

I don't want to put words in EJ's mouth, but yes - that's my understanding. I also agree with it (or you could also say that EJ agrees with me ;) ).

I currently give the significant deflation scenario no more than a 10-15% probability. You can refer to the That '70s connection thread to see the charts and rhyming aspect with the '70s that's my preferred framework or scenario.

[metalman]

Re: The dollar, precious metals, and the 'other' invisible hand

(or you could also say that EJ agrees with me ;) ).

in your dreams. ka-poom theory... disinflation/inflation... is 8 yrs old that i know of.

[bart]

Re: The dollar, precious metals, and the 'other' invisible hand

in your dreams. ka-poom theory... disinflation/inflation... is 8 yrs old that i know of.

Truth - EJ was way ahead of me in predicting it, especially in public.

[bill]

Re: The dollar, precious metals, and the 'other' invisible hand

Coordinated effort of liquidity by CB when needed,,,,no deflation

BIS Quarterly Review, September 2008
1 September 2008

http://www.bis.org/publ/qtrpdf/r_qt0809.htm

Recent initiatives
	Recent initiatives by the Basel-based committees and groups
	Full text (PDF, 10 pages, 89 kb) Central bank operations in response to the financial market turmoil examines how central banks have adapted their liquidity operations (the provision of central bank money to eligible financial institutions) in response to the money market tensions that emerged during the turbulence. The report was prepared by a study group convened by the CGFS in cooperation with the Markets Committee. It discusses the various measures taken by central banks,8 assesses the outcome of these measures and sets out a number of recommendations for central bank liquidity operations. . . The report was drafted during a time when central banks were closely monitoring market developments and, more or less simultaneously, needed to respond to the evolving challenges. Some of the specific recommendations discussed by the study group had already been implemented during the drafting period. Beyond this report, which reflects the study group’s experience and assessment only up to end-April 2008, central banks will continue to draw lessons from the turmoil and to examine how their liquidity operations can be made more effective. In particular, central banks are further exploring the steps they might take to facilitate mobilising liquidity across national borders.

[jtabeb]

Re: The dollar, precious metals, and the 'other' invisible hand

Facinating, the spot price of silver IS $1.00 lower than when I purchased two weeks ago, YET.....

The physical product price is $1.00 HIGHER!

HIGHER Physical price with a lower spot price (Right NOW)
vs
LOWER Physical price with HIGHER SPOT price (two weeks ago)

Hmmmmm.

Thoughts?

Browse Catalog Tuesday, September 2, 2008 High Activity Market Alert The precious metals industry is experiencing a substantial surge in activity which may increase the possibility of logistical delays; including customer service response time, product processing (incoming and outgoing), and product transport/fulfillment. We appreciate your patience and understanding. The Bullion Direct Team Bullion: Silver | Bullion: Gold | Bullion: Platinum | Bullion: Palladium Supplies Bullion: Silver Qty Symbol Description Price ea. SIAE001 American Eagle Silver Coin - Delayed (1.00 oz.) $15.77 SIAE500 Am. Eagle Silver Coins -Mint Sealed Crate - Delayed (500.00 oz.) $7,985.00 SIAP001 Austrian Silver Philharmonic Coin (1.00 oz.) $15.02 SIB999:0001 Silver - Bullion .999pure[Bars/Rounds] (1.00 oz.) $14.42 SIB999:0100 Silver - Bullion.999pure[Bars]- (100.00 oz.) $1,372.00 SIB999:0100:OPM Silver - Bullion.999pure[Bars]- Ohio Precious Metals 100 oz. (100.00 oz.) $1,377.00 SICM001 Canadian Maple Leaf Silver Coin (1.00 oz.) $15.52 SICM001:2008 Canadian Maple Leaf Silver Coin *2008* (1.00 oz.) $15.52 SICM500:2008 Canadian Maple Silver Coins *2008* -Mint Sealed Crate (500.00 oz.) $7,760.00 SIUS40%:$10 US*40%* Silver Coins $10 Face (1965-69) (2.95 oz.) $39.67 SIUS40%:$100 US*40%* Silver Coins $100 Face (1965-69) (29.50 oz.) $361.72

[metalman]

Re: The dollar, precious metals, and the 'other' invisible hand

paper silver market now behaving like the paper oil market, disconnected from supply/demand of stuff?

[jtabeb]

Re: The dollar, precious metals, and the 'other' invisible hand

paper silver market now behaving like the paper oil market, disconnected from supply/demand of stuff?

Yeah, but it makes me mad. I can't benefit from it! I can't buy the real stuff for a cheaper price. It's not actionable in an advantageous way. (well, other than knowing "DON'T SELL any real stuff!!")

[Charles Mackay]

Re: Largest Gold Refiner Runs out

Precisely the main actionable point of my dollar intervention and ECB gold intervention and Treasury TIO intervention, etc. fact based & posts.

Not only is my motto to ignore the real & proven men behind the various curtains quite perilous, but its also that the signals are extremely useful for trading and investing.

Just ignore the noise of folk like Mish and digger and most main stream media bozos... although I still like the concept of the real Bozo for President. ;)

One of Mish's main arguments for deflation is that he doesn't see inflation taking hold during a time when credit is contracting and housing is falling in price. But, we just had a fairly recent experience in the 70's where an asset price (Bonds) fell by 50% and inflation still roared with gold doing an x25. True, houses were still going up in the 70's but I believe the bond market is bigger than the housing market and it lost half it's value. Doesn't that historical fact trump his argument that you can't have inflation during collapsing asset prices? Maybe this has already been noted in your article... is so, I may have missed it.