inflation, hyper-inflation, deflation?

[gogotren]

I wanted to give a little insight into the whole inflation debate which feeds right into "buy gold". The outcome can/will have major impact on your life, especially if your a business owner.

Most people see the Fed is printing money, $85 B/mo right now, with no end in sight. This gets people crazy about inflation or even hyper-inflation. A few problems with that idea. Dollars are being defaulted on at almost the same rate as the Fed is creating them, hence no real increase in the money supply. Also the velocity of $ (the rate at which it changes hands) has fallen off a cliff. Gold and oil are being propped up right now by the Fed`s actions.

Our real problem is demographics. We have lots of old, aging people (baby boomers) and not enough younger people to replace that spending power. People do predictable things at predictable times, like have kids, buy first home, etc. Interest rates don`t matter. 3.5% mortgage rates or not going to make a 65 y/o couple go buy a new house. On the other hand plenty of Americans bought a house with 10% mortgage in the early 80`s.

In short deflation will be our problem for some years to come. The best strategy for this is to create an income stream vs seeking capital gains/growth. Invest wisely and don`t always listen to the talking heads.

 

[gogotren]

wow gold has its worst 2 days in over 30 years!! But isnt the fed still printing money? Now at $1352/oz down from what $1750ish. Just saying question the hype. When gas stations in Vegas have signs up "we buy gold".. gold has "jumped the shark"

 

[MAD_SCIENTIST]

wow gold has its worst 2 days in over 30 years!! But isnt the fed still printing money? Now at $1352/oz down from what $1750ish. Just saying question the hype. When gas stations in Vegas have signs up "we buy gold".. gold has "jumped the shark"

Gogo,
please elaborate. Laymans term please. What are your opinions on what is going on with the markets.

Take care,
MS

 

[gogotren]

gold/silver/oil, indexes are heading lower big time, before the end of year and into end of 2014, possibly starting right now.

jumped the shark, you know the old episode of fonzy where they ran out of ideas and he went to the beach and jumped a shark while surfing. The show was never the same, all down hill...

 

[richiec]

I wanted to give a little insight into the whole inflation debate which feeds right into "buy gold". The outcome can/will have major impact on your life, especially if your a business owner.

Most people see the Fed is printing money, $85 B/mo right now, with no end in sight. This gets people crazy about inflation or even hyper-inflation. A few problems with that idea. Dollars are being defaulted on at almost the same rate as the Fed is creating them, hence no real increase in the money supply. Also the velocity of $ (the rate at which it changes hands) has fallen off a cliff. Gold and oil are being propped up right now by the Fed`s actions.

Our real problem is demographics. We have lots of old, aging people (baby boomers) and not enough younger people to replace that spending power. People do predictable things at predictable times, like have kids, buy first home, etc. Interest rates don`t matter. 3.5% mortgage rates or not going to make a 65 y/o couple go buy a new house. On the other hand plenty of Americans bought a house with 10% mortgage in the early 80`s.

In short deflation will be our problem for some years to come. The best strategy for this is to create an income stream vs seeking capital gains/growth. Invest wisely and don`t always listen to the talking heads.

Gogo, while I do agree with a lot of what you said, I don't necessarily believe that we don't "have" the number of young to replace the baby boomers. Yes, we have A LOT of baby boomers that'll be dying off in the next few decades, BUT we do have an increasing number of young people AND immigrants coming to America every year (legal and illegal). I think it's more a generational thing than anything else.

What I mean is this: my parents were born at the end of the "baby boomer" explosion. Dad's side = him, brother and sister. Mom's side = her and 2 brothers. These kids were raised to work, and if you lost your job, you found a new one. Mom's side grew up in the heart of the depression (her parents) and from the 10 children the family had, 8 created million dollar businesses. My point being, that the "older" generation knew what it meant to work, save, prepare for tough times. The last few generations (I'm 30, so I'm in it too) for the most part have this entitlement attitude. They don't want to work. They want to go to college (for free), get out and buy a $250k house, brand new ($40k) car and start right out with a >=$100k job. They want the things that took their parents years of hard work to get, overnight. It's pure laziness. I think that is the biggest contributing factor to the loss of disposable income to come.

Where do you see precious metals getting to? I've seen silver drop 30% lately, close to the same as gold I believe. I think oil will get down, but not to the $30 mark. I think it may drop downwards of $50, but I don't know about lower, I think greed won't allow lower. I spoke to a chemical engineer in Italy in 2007 (I was on vacation and he was also. He worked for an oil company in Malaysia) about the price of oil and he told me that they are making a big profit at $35/barrel. But greed always wants more, so Imagine the profits at $90/barrel! Hopefully we'll see it drop (which doesn't always mean gas prices match ) to reasonable numbers

 

[gogotren]

richiec,
I agree with the entitled, trophy generation, selfish gen Y bastards we have and their work ethic, I`m 35, so at top end of it. There are actually more people in this group than the baby boomers, BUT it is spread out over more years of birth, hence less spending per capita per year. Immigrants, especially illegal ones are more of a drain on society than any added benefit to the growth of economy, in general, they are not filling the gap in discretionary spending the boomers leave. Boomers are going into saving, retirement mode, away from peak spending on kids in college/teens. USA`s economy is something like 70% consumer spending.

Gold I think will make its way back down to $800, def. not over $1500 again for a long time. As for oil, don`t be fooled that goldman sachs, JPM, etc. don`t make just as much money off oil (commodities, mkt) when its going DOWN as they do when its going up. There is even more money, much faster to be made on something going down, when timed right, which they seem to be amazing at... some how?

 

[Swiper]

inflation is already here. the real rate is about 6%. a lot of our inflation is outsourced to china. but those days are numbered. hope you're all prepared.

 

[Swiper]

the stock, bond and housing markets are in a bubble thats going to burst. it all relies on QE, printing money and zero % interest rates. take that away and this phony recover will crash making 2008 look like a walk in the park.

 

[Pressing]

wow gold has its worst 2 days in over 30 years!! But isnt the fed still printing money? Now at $1352/oz down from what $1750ish. Just saying question the hype. When gas stations in Vegas have signs up "we buy gold".. gold has "jumped the shark"

$1352 an ounce??? Lol, where do you get your news?

Live Gold, Silver, Platinum, Palladium Quote Spot Price Chart - Kitco

 

[jrock00123]

$1352 an ounce??? Lol, where do you get your news?



Live Gold, Silver, Platinum, Palladium Quote Spot Price Chart - Kitco

His post was in April and the number he sites was accurate.

QE is here to stay. A reduction of $10 billion a month is a joke. In other words, the fed is still printing $900 billion per year out of thin air. The very next day they announce initial claims for unemployment at a nine month high. Yellen is going to do everything possible to ensure she is not the one holding the bag when Greenspan / Bernanke's voodoo comes crumbing down. She'll have no choice but to continue the madness.

Gold is in a major correction, but still in a long term bull. A beak of 1,180 may see it test 1,000. However, if it stays above 1,200 throughout January I predict higher prices later in 2014 -- maybe $1,400? Physical demand is off the charts. Imports into China at all time highs. Also, Comex inventories are nearing dangerously low levels. Everything goes fine as long as the player are willing to settle all contracts in dollars. However, once entities start demanding physical settlement sh!t will hit the fan.

 

[Pressing]

His post was in April and the number he sites was accurate.

I'm an idiot. I can't believe I didn't see the date if that piety. Never mind me.