So, when do you think the printing press will start?

[labasta]

Re: So, when do you think the printing press will start?

In my local supermarket they are slashing prices! Must be deflation..

The prices went up here in Ireland, now they claim they will come down. I've reduced my expenditure by shopping at Lidl, Aldi and going for 2 for one specials at Tesco. What I have noticed in the last few months is the reduction in packaging sizes in some things. I believe we could be entering a serious inflation phase. It's difficult to tell. A smart shopper can always keep it reasonalbe (for a while at least) anyway.

I'm not sure of the Irish government's situation. They have increased some taxes and decreased spending (in the softest of targets, of course: the elderly and kids, but not the police, funnily enough). I guess they are going to try and avoid the ultimate defeat of printing or borrowing (which will mean either printing or taxation anyway).

They have quite a leeway still. It's still a very low tax country. The Celtic Tiger is well and truly over here. We are looking at a deep recession.

I'm honestly not sure if the 12.5% corporation tax will cut it this time if (when) America goes down. That has been the main reason for the Celtic Tiger 1993 to 2001. We are definitely going back to 2001 level of econ activity, but I fear it'll get a lot worse than that. 2001 to 2006 was because of cheap money (property boom).

On a side note in the real world I've been hearing of redundancies all round. Medium size accountancy firm (100 people) firing 12 of their staff (unheard of here) so far. Dell leaving soon from Limerick. You can't sell a house here unless you knock 20% off the price straight away, and then it's not certain.
Since July, the dole offices haven't been able to cope with the applications, leaving many unemployed with the shitty end of the stick.
Teachers getting shafted (500 jobs to go in the country - kids can't go on any school trips anymore due to changes in supply teacher rules). Outside the main metropoles, the only way to get work in Ireland these days is to work in a shop or work for the government or own land and become a farmer. The government is cutting back and this will be only the beginning. I can't wait for the 2009 and 2010 budget

The only thing keeping Ireland alive is it s corp tax. I do hear of UK firms moving over. So let's hope that keeps it going.

I fear the worst for Ireland though.

[raja]

Re: So, when do you think the printing press will start?

gold is going to disappoint. It will "break out" up to $1800-$2000, but silver will "break out" to $50-$80. That is a performance difference of 260% (gold) vs. 800% silver. I think I'll hang on to my silver. The convergence of global industrial demand with inflation hedge / financial demand brings the bacon home for silver out there, but gold is a pure financial / monetary hedge

lukester,

If the economy is in such a state that gold doubles in price, do you think that the industrial demand for products requiring silver would be high?

My thought is that in a high-inflation environment, coupled with recession/depression, that demand for all industrial products would be low.

[Guest]

Re: So, when do you think the printing press will start?

Raja -

Keep in mind we are referring to 2014 so that's about six years out. The world in the 2010's and 2020's is most definitely going to be in a higher growth trend than the average of the preceding 30 years, if only because it is departing from a very much larger base industrialised population! Add in very high currency debasement worldwide, and add in that global recessions are not ever unlimited events. In a worst case you'd expect a global recession to last 3-4 years, and that would be really, really bad.

The trump card here is the ratio of a very high starting population / industrialised consumer base today, vs. critically depleting resources. Yes, resource depletion is not some panicky issue to be addressed only "30 years from now". Ask the USGS about the depletion rate and consequent timeline on rare minerals. In an approaching world of 7 billion consumers it's shocking.

The very worst global deflation today keeps right on vacuuming up far greater quantities of commodities than were vacuumed up during the most blistering growth years of the 1970's and 1980's! This is a big difference in understanding what economic slump even means today as opposed to 1980 for the commodities segment. We are further out on the depletion curve and much further out on the global industrialisation curve. Therefore the bleakest, ugliest global depression today does not do nearly as much as it did back then to slow down the consumption of commodities - and when you get into the critically rare resources that is a very big difference compared ton 1980.

I would resist all inclination to be "awed" by the ugliness of the current global slowdown. Resource depletion is very real in the context of a world that has reached such an inflexion point that it can add in a decade or a scant fifteen years, one billion active consumersmore, which 30 years ago might have required 4 decades to add. Exponents can do tricky things when they cross each other going in opposite directions. Throw in Peak Cheap Oil and I think all the hand wringing going on now about not wishing to buy commodities going into a global recession is really short sighted.

I see you assigning a considerable flattening power to all sorts of materials consumption / depletion trends due to pure economics. You've been of that view for the past two years I've been reading here. My sense is that you are ascribing to gdp growth rates and global recessions, a sway over the broader trend in commodities consumption that might have been more appropriate for the year 1980 than it will be to the year 2010. What was the industrialised consumer base back then? About half what it is now? Only 30 years ago!?

lukester, If the economy is in such a state that gold doubles in price, do you think that the industrial demand for products requiring silver would be high? My thought is that in a high-inflation environment, coupled with recession/depression, that demand for all industrial products would be low.

[raja]

Re: So, when do you think the printing press will start?

I see you assigning a considerable flattening power to all sorts of materials consumption / depletion trends due to pure economics. You've been of that view for the past two years I've been reading here. My sense is that you are ascribing to gdp growth rates and global recessions, a sway over the broader trend in commodities consumption that might have been more appropriate for the year 1980 than it will be to the year 2010.

Yes, I'm pessimistic . . . and probably being over-simplistic . . . but FWIW . . . .

My feeling (I won't say, "I just know" ;)) is that things are going down in a big way . . . lots of unemployment, and the world getting poorer. I don't know how long it will last, but probably a number of years . . . and there won't be much demand for silver. Some day things will turn around, but they will never be the same, because of Peak Cheap Oil and other dwindling resources.

[Guest]

Re: So, when do you think the printing press will start?

Ah, your reply points out something interesting, an assumption that we all make. I was pointing out that something like silver looked like a really good investment out in 2014. I did not say I thought it would be a really good investment tomorrow, nor the next week. When we propose a really nifty sounding investment idea and say"look, that thing will likely go up 800% in a mere six years", :eek: we of course need to factor what it means in "human terms" to hold a thing that may be a dog of an investment, for six years until it suddenly explodes 800%.

Some people would take that 800% and say "Yes but that performance is actually zero percent for five years, then 800% in the sixth year, so that's no use to me because I want something in my pocket sooner". Other people would say "Hmm, that works out to 133% a year which is not too shabby for a non-equity investment as long as this result has a very high probability". These are very different ways of looking at the value of "waiting".

And indeed the much more popular way to invest is to "look for things that are going up", which means you don't ever buy something unless you are pretty sure it's going to go up in just a few weeks or months. There's another type of investor, who looks at a thing and says "wow that looks really really cheap, and I have no idea when it will go up but I think I'll take a piece of that and just let it pop whenever it decides to". They are different ways of looking at this thing called "owning assets that have value".

I've found in the past decade that when I was always looking for things that were going to go up soon I was constantly ducking and weaving about, and the batting average was all over the map. Sometimes brilliant and other times wretched. All I was pointing out about gold and silver was that for those in the USD zone these investments may be quite disappointing for quite a bit longer than we imagine. So in a way that's useful because it helps everyone decide whether they like owning anything for the longer term. Momentum traders will wander off here.

Yes, I'm pessimistic . . . and probably being over-simplistic . . . but FWIW . . . .

My feeling (I won't say, "I just know" ;)) is that things are going down in a big way . . . lots of unemployment, and the world getting poorer. I don't know how long it will last, but probably a number of years . . . and there won't be much demand for silver. Some day things will turn around, but they will never be the same, because of Peak Cheap Oil and other dwindling resources.

[raja]

Re: So, when do you think the printing press will start?

Some people would take that 800% and say "Yes but that performance is actually zero percent for five years, then 800% in the sixth year, so that's no use to me because I want something in my pocket sooner". Other people would say "Hmm, that works out to 133% a year which is not too shabby for a non-equity investment as long as this result has a very high probability". These are very different ways of looking at the value of "waiting".

If that's the case, I'll wait for year 5 to invest.