narco

The pound is on the brink of a historic collapse and you have a pop at gold? Not a tad worried about that old STR fund are we?

This.

Nice ramble. So what exactly are you trying to say? Buy dollars?

I've never read so many lines of utter garbage in my entire life.

So in order to just keep this sucker from collapsing, the Fed now has an exponential balance sheet on it's hands. They've already gone from $850 Billion to $2.5 Trillion in just a couple of months. Look at M3 with Fed activity compared to M3 without (light blue line).

Asset deflation meets monetary inflation meets currency devaluation. A lovely recipe for pain.

Mish's theory is that gold is money and everything must down against gold. That is most certainly what happened today even while the dollar was rising against the Euro.

Gold Surges Amid Deflation Concern http://www.bloomberg.com/apps/news?pid=206...fer=commodities Nov. 21 (Bloomberg) -- Gold rose, heading for the biggest weekly gain since September, as the global economic slump dragged down asset prices and boosted the appeal of the precious metal as a store of value. Silver and platinum also gained.

I thought they stopped minting them?

I Like Gold Here http://globaleconomicanalysis.blogspot.com...-gold-here.html I have often said that gold would decline in the initial stages of deflation as leverage was wiped out everywhere. If that leverage has been wiped out, gold miners have a lot of catching up to do with the price of physical gold. Finally, gold itself is now free to rise in deflation given its true role as money, even as those in gold for the wrong reason (as an inflation hedge), bail.

Deflation anyone?

Here's a new one for Bloomberg. Gold Surges Amid Deflation Concern; Silver, Platinum Rebound http://www.bloomberg.com/apps/news?pid=206...fer=commodities Nov. 21 (Bloomberg) -- Gold rose, heading for the biggest weekly gain since September, as the global economic slump dragged down asset prices and boosted the appeal of the precious metal as a store of value. Silver and platinum also gained.

If there is any indication of a delivery default, the paper market will break in it's current form. We could see a massive spike and then a complete price revaluation. Physical gold in the retail market is currently around $900.

If you want to see outcome of backwardation in action in the precious metals market, take a look at Platinum in later 2007 or palladium early 2001.

Backwardation doesn't necessarily the price is expected to to fall. It simply means buyers are less interested in gold futures due to the potential risk of delivery default.

No they will just keep pumping out those digits and eventually people will get the idea that paper money is an unsound store of value.

You're spot on, the general public don't appear to be getting much a slice.

My word. Provisional figures for October indicate that M4 rose by £42.9 billion, seasonally adjusted; above the average flow for the previous six months of £21.6 billion. The twelve-month growth rate rose to 15.1% from 12.6% in September. http://www.bankofengland.co.uk/statistics/...rrent/index.htm

Those in debt will hurt the most but savers will suffer due to a rise in the general cost of living. I think cars will become more expensive, certainly quality 2nd hand ones due to a lack of new supply. We'll be back to seeing tons of bangers on the road again, 80's style.

Oh for sure, maybe 6000 for the dow:gold 1:1 ratio in 2012 maybe?

Oh they'll sell those gilts eventually even if the BOE just buy em up with freshly created currency. I remain very sceptical about price deflation. All I can see ahead is pain and misery but with none of the benefits associated with falling consumer prices.

I agree that inflation and deflation is measured by money supply only. It is worth remembering that we've had a decade of 10-13% money supply inflation yet practically a 1-2% CPI for most. As for foreign goods, you know very well we import most of our food and energy which isn't discretionary. My near term thinking is they'll just about keep money supply positive yet the £ will continue to drop. I'm going to use the petrol price to benchmark this.

4000 looks good for the DOW

So money supply contracts by 5% but the foreign exchange value collapses by 90%. Is this scenario inflationary or deflationary?

Looks like your buddy Buffet is in a spot of bother. Berkshire's Credit Risk Soars on $37 Billion Bet http://www.bloomberg.com/apps/news?pid=206...&refer=home Nov. 18 (Bloomberg) -- The cost of protecting against default by Warren Buffett's AAA-rated Berkshire Hathaway Inc. has almost tripled in two months, a sign of just how skittish investors have become amid the global financial crisis. The cost to protect against Berkshire being unable to meet its debt payments, based on credit-default swaps, is more than four times that of rival insurer Travelers Cos. At those levels, the swaps are typical of companies rated Baa3 by Moody's Investors Service, one level above junk. The price may have risen on concern that the billionaire's firm could lose a $37 billion bet on world stock market values more than a decade from now.