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http://www.kitco.com/ind/Gerbino/jan272009.html
Here is the snippet I'm interested in and would like some feedback on. The full article link is posted above:
I dumped everything from stocks prior to the bust. I'm thinking now may be a good time to buy into commodities. I'm not so sure about mining stocks but everything else seems to make sense. Any additional insight?
Here is the snippet I'm interested in and would like some feedback on. The full article link is posted above:
What to Do
Am I telling you all is OK? No. I am telling you things are as bad as you think. But the authorities are using this crisis to bail out the system with paper money and because of that, the economy will once again go into a so-called boom that will be very inflationary. If you think a Depression is coming you will have your assets in the wrong place at the wrong time.
What Happens Next
A Depression is impossible in the old sense of the word. If one describes a depression as the loss of purchasing power of the wage earner (a correct definition), then we have been in one for the past 50 years since wages have not kept up with the cost of living. But since everyone is thinking breadlines and the 1930’s, I will stay with that picture for our definition. It is not going to happen.
Also, remember that the $2-3 trillion bail out numbers you are reading about can easily be bumped up to $4-5 trillion. Why not? The reason for the increase is simple…..”We are heading into the Greatest Depression in history.” As long as this misguided concept gets press and the NY Times, the media and politicians buy into it, then the government has a green light to create as much money as is needed.
- Expect Inflation not a Depression.
- Expect a boom to start sooner than later.
- Know the past and respect logic, not headlines.
Am I telling you all is OK? No. I am telling you things are as bad as you think. But the authorities are using this crisis to bail out the system with paper money and because of that, the economy will once again go into a so-called boom that will be very inflationary. If you think a Depression is coming you will have your assets in the wrong place at the wrong time.
What Happens Next
- The economy stagnates for another 9-12 months then turns around.
- Unemployment goes down with the induced economic upturn.
- The stock market rallies but never gets above its old highs.
- Inflation comes back with a vengeance.
- Commodities resume their bull market and turn the deflationistas into inflation believers.
- Interest rates will go up with inflation and probably to much higher levels.
- The stock market will go down when interest rates start going up.
- Long term bonds will become the worst investment in the world.
- The dollar will go down but so will other currencies as many world governments print their way out of their economic woes as well.
- Gold will go to new highs.
- Housing and real estate will recover but higher interest rates will slow this sector down considerably in the future.
- The gold and silver mining stocks will become the best performing sector on Wall Street for many years.
- The price of oil will go up due to inflation and global production declines of 5-8% per year from most of the largest oil fields in the world.
- The U.S. “recovery” will help the world recover and almost all countries will have another artificial economic expansion from all the paper money they have printed as well.
- China and India will create more shortages of basic materials and commodities by the sheer size of the populations and their economic and industrial progress.
- The U.S. will have even more economic dislocations from all the new paper money and debt taken on by Washington.
- The country gets set up for the next horrible recession some time in about 3-4 years.
A Depression is impossible in the old sense of the word. If one describes a depression as the loss of purchasing power of the wage earner (a correct definition), then we have been in one for the past 50 years since wages have not kept up with the cost of living. But since everyone is thinking breadlines and the 1930’s, I will stay with that picture for our definition. It is not going to happen.
Also, remember that the $2-3 trillion bail out numbers you are reading about can easily be bumped up to $4-5 trillion. Why not? The reason for the increase is simple…..”We are heading into the Greatest Depression in history.” As long as this misguided concept gets press and the NY Times, the media and politicians buy into it, then the government has a green light to create as much money as is needed.
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