Prices, Inflation/Deflation, Interest Rates & The Fed

elenore

Pigeon
I like silver. It holds its value, if you are just dipping into it go with 1oz rounds or perhaps some 10oz bars. It might be something that is on a practical level exchangable. It is fully outside the system.

Unfortunately the premiums are very high right now. I recently got a 100oz bar because the premiums were much closer to normal, versus the surge in 1oz demand.
 

NoMoreTO

Ostrich
I'm surprised people are buying silver and gold. The time to do that was 5 years ago.
True.

But it'll all be gone soon enough, and unavailable. Would've been nice to buy a farm 5 years ago too, but not many for sale in my area. About 1/4 of the listings vs. 2 years ago when I bought. People want solid investments.

Because 5 years ago it was way more easy to actually find value in the market.

Gold miners are one of the few place with reasonable P/E and P/B values.
Gold is not really an investment.

Gold isn't really an investment, its just been a store of value.

It's also real money, and when people make a run for real money , it'll put real estate to shame. Bitcoin has had it's rip, maybe it'll be the real money and go to the moon, but it came from nothing, it'll settle one way or the other sometime in a future that's hard to read.

Gold is still gold. It'll always have value, and it will always hold value, it won't go to 0 - ever. Bitcoin on the other hand???


 

C-Note

Ostrich
Gold Member
I'm surprised people are buying silver and gold. The time to do that was 5 years ago.
That's one of the reasons I'm investing in mining stocks instead of bullion. However, being in mining companies gives me more exposure to market risk, so it could be that I'm not taking the optimal approach. If the dollar crashes really low, I imagine that having precious metals to exchange for goods and services would be of benefit, even if you did have to buy the metal at premium price.
 
True.

But it'll all be gone soon enough, and unavailable. Would've been nice to buy a farm 5 years ago too, but not many for sale in my area. About 1/4 of the listings vs. 2 years ago when I bought. People want solid investments.



Gold isn't really an investment, its just been a store of value.

It's also real money, and when people make a run for real money , it'll put real estate to shame. Bitcoin has had it's rip, maybe it'll be the real money and go to the moon, but it came from nothing, it'll settle one way or the other sometime in a future that's hard to read.

Gold is still gold. It'll always have value, and it will always hold value, it won't go to 0 - ever. Bitcoin on the other hand???
That's one of the reasons I'm investing in mining stocks instead of bullion. However, being in mining companies gives me more exposure to market risk, so it could be that I'm not taking the optimal approach. If the dollar crashes really low, I imagine that having precious metals to exchange for goods and services would be of benefit, even if you did have to buy the metal at premium price.

Gold is an insurance policy, imho, although Selco has had some good articles on what happens using gold and silver during a currency crisis. However, I thought we were talking about physical. On re-flation, yes, buying miners might be good short-term plays but I haven't followed (or played) that market closely in years.

Obviously not very nuanced but entertaining.


Kind of reminds me of this


(no offense to Endless Gravity - he makes legit arguments and is very knowledgeable and will be proven right once the Fed takes a pause on the printing).

REEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE

:)
 
There are a lot of possible outcomes, I'm in the inflation camp but the "Dollar Milkshake Theory" had me thinking as well. As much as we are printing, most other economies are even weaker than the US. The theory is that the USD will strengthen against all other fiat in the mid term, since eurozone and 3rd world are even more locked down/welfare state than USA (except China) Countries with dollar debt will be in trouble and a lot of collateral hard assets will go to China when the defaults come. QE from the fed won't be enough to weaken the dollar (the only way to save the world's fiat system and prevent China from acquiring trillions in hard assets.) That will create the mother of all financial crises, and emergency legislation will do something to reset the system.

Scenario 1: CBDC, to create enough inflation in the USD to prevent a world crisis
Scenario 2: Dollar value reset VS gold which would pay off US debt to GDP and devalue the dollar enough to prevent world chaos (if gold was repriced from $2k/oz to $50k/oz, 12 trillion could be paid off, reducing US debt to a realistic 60% of GDP instead of 130%) And yes I said $50,000/oz. It could have been done in 2009 with a devaluation of *only* $5,000/oz.
 

Johnnyvee

Pelican
There are a lot of possible outcomes, I'm in the inflation camp but the "Dollar Milkshake Theory" had me thinking as well. As much as we are printing, most other economies are even weaker than the US. The theory is that the USD will strengthen against all other fiat in the mid term, since eurozone and 3rd world are even more locked down/welfare state than USA (except China) Countries with dollar debt will be in trouble and a lot of collateral hard assets will go to China when the defaults come. QE from the fed won't be enough to weaken the dollar (the only way to save the world's fiat system and prevent China from acquiring trillions in hard assets.) That will create the mother of all financial crises, and emergency legislation will do something to reset the system.

Scenario 1: CBDC, to create enough inflation in the USD to prevent a world crisis
Scenario 2: Dollar value reset VS gold which would pay off US debt to GDP and devalue the dollar enough to prevent world chaos (if gold was repriced from $2k/oz to $50k/oz, 12 trillion could be paid off, reducing US debt to a realistic 60% of GDP instead of 130%) And yes I said $50,000/oz. It could have been done in 2009 with a devaluation of *only* $5,000/oz.

I always liked Marc Faber`s perspective on gold and it`s value. I remember that he mentioned in an interview post 2008 financial crisis, that you "could revalue gold to say a million dollars," (paraphrasing) and then adapt a gold standard from there. Sounds extreme, but I think he has a point. Of course that would be all gold bugs wet dream. Here`s a recent interview excerpt on the topic of gold pricing;




They have to do something down the line though. There is no connection between the housing market and the real economy anymore. And that`s the case not just in the urban areas of the US, we have the same thing in Norway also. Boomers sitting on these ridiculously priced villas, while their grandchildren are living "like pigs" in shared flats etc. It`s totally meaningless and immoral also. The prices of real food are also rising beyond the capacity of most people`s economy. Heck, even crap food is becoming too expensive for the poor soon. Brazil is in this crisis right now, and soon it will come to the US. People are malnourished as it is, and it will get even worse. They might have sufficient calories, put it`s crap calories, without nutrients.

The good news; the emerging economies/Russia/China are doing things differently. They are accumulating gold and silver, and may be moving towards a system where the currency is tied to commodities/precious metals. (a gold backed state issued crypto maybe?) And they are winning the race it seems. (at least China) So if you own gold, you will have a market for it there, when it`s hopefully time to sell with a handsome profit. The challenge that I see with gold is safe and affordable storage.
 

MRAll134

Pelican
But, I thought Silver and Gold were in the Constitution? What happened? :alien:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
 

aynrus

Pelican
The inflation, for now, is concentrated in the financial economy. But it will soon spread to the cost of everything we buy. It has already spread to houses. This phenomenon is known as asset inflation vs price inflation. Large assets such as stocks, homes, etc. that are bought with bank funds are the first to experience inflation. It later spreads to the cost of everything else.

The one thing everyone should be doing is stocking up on whatever you can of value, as these items will soon cost twice what they do now. Razor blades, toilet paper, equipment like lawn mowers and blowers, just buy whatever you can, if you know you will eventually need / use it. If you have excess funds, you can try investing in real estate or stocks or crypto or precious metals but that is far more dangerous and I don't know which of those will be a good move, if any.
Inflation hit consumer goods prices long time ago, back in spring of 2020 and kept going.

People please do not buy things up and stockpile, this is insane. You'd be only contributing to fake "shortages" and creating them out of thin air. This hoarding is a sign of people going mad.
Especially please leave toilet paper isles alone, I think it's time for involuntary commitment of people stocking up mounds of TP, I swear. Hoarding razor blades? May be if living in Somalia.

Rice and beans aren't about to run out and you're not about to starve to death, folks (unless you're in poverty-stricken 3rd world country).
 
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budoslavic

Owl
Gold Member

US Coast Guard shuts part of lower Mississippi River as bridge cracks​

More than 400 barges were delayed on the lower Mississippi River on Wednesday after a bridge crack prompted the U.S. Coast Guard to halt vessel traffic on a portion of the waterway crucial for shipping crops to export markets.

The disruption hit as strong demand for U.S. corn and soybeans has tightened inventories and pushed crop prices to their highest in more than eight years. Also, U.S. President Joe Biden is seeking to have Congress approve a $2.25 trillion infrastructure bill. read more

The Coast Guard stopped all traffic on the Mississippi River near Memphis - between mile markers 736 and 737 - after a crack was discovered in the Hernando de Soto Bridge that spans the river, according to a statement.

There were 12 vessels with 157 barges in the queue to pass northbound and 16 vessels with 254 barges in the queue to go southbound, Lieutenant Mark Pipkin, a Coast Guard spokesman, told Reuters. The barges are carrying a mix of materials including crude oil and dry cargo like corn or rocks, he said.

Pipkin said it is not known when the river will reopen.

The bridge carries I-40 over the Mississippi River from Memphis, Tennessee, to West Memphis, Arkansas.

Almost all grain barges must pass underneath the bridge on their way to Gulf of Mexico export facilities near New Orleans after being loaded along the upper Mississippi, Ohio, Illinois or Missouri rivers, according to the Soy Transportation Coalition, an agricultural industry group.

For the week ending May 1, 438 grain barges moved down river and 809 grain barges unloaded in New Orleans, the U.S. Department of Agriculture said.

"Any suspension of traffic – even temporarily – on the Mississippi River is most unwelcome to U.S. agriculture," said Mike Steenhoek, the coalition's executive director.

"It is reasonable to assume hundreds of barges of U.S. grain will be negatively impacted by the closure depending on its duration."
 
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