Friday, Oct 24, 2008
Phew. The ultimate bear. But he's been right on the money now for over 50yrs!
The International Forecaster: Insider profiting will bring the hyperinflation juggernaut
M3 continues to rampage, will manifest as hyperinflation 6 months/1 year, pressure to bail out of treasuries will reach critical mass and the whole world is going to run for the exits at once. Then all those parked and hoarded dollars will come back to haunt us with a vengeance, and we will be completely, utterly and immediately Weimarized as everyone tries to grab as many tangible, real US assets as they can get their hands on. We will literally be awash in dollars, as if a dollar tsunami had just been unleashed by a Force 10 earthquake. We also expect to hear more threats from OPEC nations to break dollar pegs as the price of oil continues its downward spiral, and this could be the straw that breaks the camels back. If you don't own gold and silver, you will be wiped out.
42 Comments
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1. planning4acrash said...
Sorry folks. I think this is what will happen. Its why I keep banging on about self-sufficiency and supporting local farmers. If you live in the country, build a personal relationship with your local farmer.
2. debtfree said...
Think of a Tsunami and how the sea reacts before the tidal wave comes rushing back.
America is heading for hyperinflation, no two ways about it.
3. str 2007 said...
If you don't own gold and silver, you will be wiped out.
Can anyone explain why Gold is firmly heading down at a time you'd expect it to be going in the opposite direction ?
And if the USA becomes awash with dollars and there is a scrabble for real assets won't that put a peg under house price falls over there.
Would the hyperinflation help erode away the debt ?
4. debtfree said...
no cash. no cheques...... no dollars thank you
http://sfbay.craigslist.org/sby/roo/889292171.html
5. str 2007 said...
debtfree
OK so there's one advert from a self confessed 'metal investor' who's asking for payment in silver eagles or gold maples.
That doesn't answer my questions, if indeed there are any answers.
I think we're all searching for the likely outcome of this.
From my point of view the harder I look the blurred it becomes with absolute apposing answers from people who think they know. IE Hyperinflation/deflation. And knowone really seems to be able to pin down the outcome of either.
6. theboltonfury said...
the answer is simple
those with gold bang on like a stuck record that we will have hyperinflation because it really suits them, those with savings do the same about deflation because it suits them. VI's all round
maybe a slight generalisation, but you get my drift
7. nubbers said...
Buffet is buying shares. Whilst past performance is usually no indicator of future performance, I am more inclined to heed the actions of the worlds richest man.
8. Digbypenguin said...
Can we not estimate whether we are falling towards deflation or inflation by comparing the growth in the money supply with the contraction caused by defaults? Does anyone have the numbers?
As I understand it, it is the debt defaults and the unwinding of bank multipliers that are deflating the supply at the moment. But with bailouts and extra liquidity injected the defaults are not happening very quickly and the unwinding has slowed or reversed.
Now the liquidity injection from Governments and central banks should stop at the bail outs, but I suspect that now they are down this road, they will use the same mechanisms to try to avert a recession and to reverse asset price falls. In which case, inflation.
I think we are having trouble deciding between deflation and inflation because it is not the result of an infallible physical process, but the result of Government choices. Who really knows which way they will go?
9. debtfree said...
str2007....
Can anyone explain why Gold is firmly heading down at a time you'd expect it to be going in the opposite direction ?
Because the world is mental.
Can anyone explain why people were given 125% mortgages ?
or why BOE is lowering rates when inlfation is double the government target ?
Gold is being hammered, but..... it will rise again. Oh yes.
10. debtfree said...
If Gold was acting like it should be, I would be selling, because the storm would soon be over.
The storm is not over, we are still in the middle of it.
11. sold 2 rent 1 said...
str2007,
Gold is falling because the markets fear deflation. We can expect to get massive IR cuts in the next few weeks and months to avoid a depression.
This will eventually swing the fear-o-meter to inflation by next spring as more money than you can imagine gets printed.
Hyperinflation is not the best description as wages, property and stocks will still fall, a better description is currency destruction.
12. sold 2 rent 1 said...
"currency destruction" or "inflationary depression"
13. shipbuilder said...
I agree, theboltonfury. It's difficult to get a neutral opinion on the deflation vs hyperinflation argument. I've seen articles written by others who predicted recent events that opt for deflation. The gold argument assumes that people will rush to gold as an inflationary hedge. I'm sure it's a valid assumption, but an assumption nonetheless. If property has fallen sufficiently before any inflation kicks in, the money could go that way.
The hyperinflation argument seems to assume that the bailout money vastly outweighs the money being wiped out - can anyone say this for certain?
14. jonb said...
Gold is falling because it is a luxury item that people cut back on when they are short of money. Gold coins and bars are a very small part of the market. Most of it is used to make jewelry.
15. sold 2 rent 1 said...
Gold is falling but only at the same rate the GBP/USD. Now at 1.55 - blimey
16. d'oh said...
jonb - actually, most of it is (supposedly, though see gata.org) sitting in government vaults. I have both cash and gold. So I'm a VI for both sides of inflation and deflation. My mother, despite my pleas for the past 4 years is in cash only. It would be better for my family if we were hit with deflation. I fear that the tidal wave of cash argument may be correct however. Scary times ahead.
As for Buffet - owning shares is owning a portion of a company and if the company survives, would be the right thing to do in hyperinflation.
17. jonb said...
d'oh
The bars sitting in government vaults isn't part of the market, unless the governments decide to sell it because they are short of money. I doubt very much they will buy in the current climate.
18. str 2007 said...
theboltonfury & shipbuilder
Yes these were my thoughts on Gold/Cash and Shipbuilder I'm also inclined to agree with the possible outcome of ''if property has fallen sufficiently before inflation kicks in the money could go that way''. theory of yours. I'd also add to that the fall may not be in the actual ticket price but in the monthly repayments (this obviously assumes that interest rates are drastically cut, mortgages and funds are reasonably readily available at these lower rates) and to pin point rates I think the 30-50% fall that's talked off in actual prices would need to be at least that in the % rate of mortgages. So if the average %rate of a mortgage now was 6% then if rates were 50-60% below this, ie 2.5-3.0% average and could be fixed for say 10 years then this IMO could underpin actual falls.
The government I think will do all in their power to facilitate this IMO.
S2R1
You made it back ok then, I see Mark Wadsworth was back in time to post last night ? He's addicted I tell you.
I don't suppose in your vast library of knowledge you know the % split on how much gold is held in vaults against how much goes into industry/jewellrey market do you ?
Nubbers
Warren Buffet SAYS he's buying stocks. If he is he has far better knowledge than I and his level of buying power can effect the market in his favour (particularly when he tells the world).
I think I'll stick to being the second mouse that gets the cheese rather than the early bird who gets the worm !
19. techieman said...
Shipbuilder: "The hyperinflation argument seems to assume that the bailout money vastly outweighs the money being wiped out - can anyone say this for certain?" The answer is you are right no one can say this for certain. My view is deflationary - at least for a while, but the indicators will point to the outcome before it happens. In the meantime it looks like Volatility in all markets rules!
20. techieman said...
str2007 - glad you all had fun last night... re shares, yes Buffett doesnt try to pick bottoms he just looks for value - so he can be wrong for a while. As you probably know we are flirting with the bottom again now - but im not sure if this is a Bear trap or the proper move to new lows. After this (if it is the proper swing low) or after this - more choppy and a proper swing low, i think we see a more meaningful rally. Thats a technical view not fundamental. Good analogy re the mouse and the worm. But remember Bears eat both, although they may take a while to find 'em.
21. theboltonfury said...
btw anyone who went out last night - I hope you all had a good night and no one got on the karaoke machine.
I could imagine STR1 doing a certain number by Spandau Ballet
22. sold 2 rent 1 said...
theboltonfury,
What we are seeing here is gold and silver (now at 8.78 - a fantastic buy) putting in a massive correction to set up the next massive upleg.
It is identical to the 1998 LTCM crisis and dot-com stocks. Then, they had a massive correction only to sky-rocket in the next 18 months to the peak in March 2000.
Spring 2010 for a mania in gold and silver (but not the final mania mind you).
When has there ever been a mania for fiat currency - never.
23. theboltonfury said...
TM - I think we all know that bears only eat small American children on school summercamp trips.
24. jack c said...
As you guy's say it's very difficult to judge the inflation/deflation arguments at the moment however in recent weeks the UK indexed linked gilt market has seen a significant drop which would back techiemans view above (I know you cant exclude the fact that the Gov will need to issue new Gilts and thus supply/demand issue's come into play)
Looks like we need cover both scenarios
25. last_days_of_disco said...
Hey, p4c, where were you last night, we had a good time!
26. techieman said...
Boltonfury - True? Work till your musclebound? Through the barricades ? ;-).
27. d'oh said...
jonb - the point is about all the bars sitting in the government vaults is that:
(1) simple notions of supply and demand do not work in the case of gold as the amount theoretically available is large relative to the actual market. If governments decided that gold was worthless it would become worthless overnight as all stocks were dumped. Alternatively, if they decide it is worth something, the effect on the world marginal price of gold would be extreme as the amount produced each year is, relatively, quite small.
(2) The amount that has been sold into the markets by European governments over the past couple of years is a sizeable portion of the world market - 10-15%, so will have an effect on prices at the margin.
28. sold 2 rent 1 said...
str 2007,
Got back fine.
It was a good night.
29. d'oh said...
str 2007 - The amount held by governments/central banks is a point of contention. If I recall correctly, the claim is that about 30,000 tons is held, but GATA have argued (quite convincingly in my opinion - they provide 6 independent pieces of evidence that support their contention) that the actual amount may be between 15,000 and 20,000 tons, with the rest having been sold into the market over the past decade or so.
30. str 2007 said...
I wonder what 'Equity Bull & Co'' think of todays falls - hope you're not missing the buying opportunity today, good to meet you both last night. Get your new tag up and running and get posting. Always interested in an insiders view point.
31. str 2007 said...
S2R1
Spot on venue for Pie and chips.
I see there's no sign of Mark Wadsworth today (I told you those onions and swedes were off - he ate the lot) probably in bed ill !
32. str 2007 said...
techieman
Sorry remind me again of your lowest 'swing low' prediction ?
Mine starts with a 2 an upper 2 but that's only based on gut feeling as to where it should be given the future outlook. Roughly 55-60% off mid 6 peak.
So far my back of a fag packet guestimates haven't been bad ie ftse way to high at low 5's and Gold in a bubble at $8-900oz. I missed the collapse of Sterling/Euro against the Dollar though (which I guess partly explains Gold price in Dollars.)
Given the horrendous state of things in the US and the low interest rates is there an obvious reason for this strengthening of the Dollar ?
33. dohousescrashinthewoods said...
Seems to be deflation at the moment, gold has tanked.
34. sold 2 rent 1 said...
str2007,
Graph for 'Equity Bull & Co''
35. mountain goat said...
personally I hope gold breaks below $600 then I am a buyer again. Trouble is the GBP I am earning are falling faster grrr
36. str 2007 said...
S2R1
Looking at your graph my fag packet guestimate of upper 2's would be about spot on then (according to the green arrows and numbers you've put on.
I assume these are ftse numbers on this DJIA chart ?
Is there an updated version of this chart showing ftse movements ?
37. mountain goat said...
the bulls have lost their nerve stampeding to the safety of the dollar, like bison stampeding from a fire over a cliff.
38. techieman said...
str 2007 - i will come back later - bit busy...
39. p. doff said...
See deflation/inflation debate posted above.
A deflationary view with a warning about gold. But does anybody really know?
40. sold 2 rent 1 said...
str 2007,
The chart is for DJ index
41. str 2007 said...
S2R1
See how you can read anything you like into a chart !
I'll shut up now.
42. yoyo1 said...
'Once they have sated themselves on their starting position, either short or long, they and the PPT, backed by tens of billions from the repo pool, along with con-men like Buffett and Cramer, go to town on the public markets, driving them up or down like a yo-yo'
Could not have put it better myself.