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Commodity Price Collapse - Could This Be Ushering In Deflation

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http://biz.yahoo.com/cnbc/080805/26035811.html

CNBC
Big Selloff in Commodities May Help Ease Inflation
Tuesday August 5, 2:02 pm ET
The recent pullback in commodity prices—particularly oil—is expected to have a moderating influence on inflation in the coming months, providing some relief for consumers, the stock market and the Federal Reserve.

GOLD

08/05/2008

15:21

874.20

875.80

-19.60

Does the inflation tank have much more fuel? Unemployment is around the corner as consumer demand plummets. Credit is getting tighter as the trillions of missing dollars and pounds take their toll. None of this bodes well for those seeking to raise prices. In fact, a deflating bubble may well end in a deflating economy where deflation once more rules the earth. You know it makes sense.

If the commodity drop turns into a full blown crash we could see a gold and oil route in a matter of days.

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A rout in prices? , etc....

is it me or do I have a feeling Gordon is going to take the credit for 'helping people feeling the pinch' when he has sod all control of such things, and will probably think oh people have more spare money now lets scoop it up in tax instead and call it a green tax!.

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http://biz.yahoo.com/cnbc/080805/26035811.html

If the commodity drop turns into a full blown crash we could see a gold and oil route in a matter of days.

I agree totaly and mass unemployment ( i cant see how that can't hapen ) will probably trash the housing market by %70 within 2 years.

Q2 2007, how right you were RB.

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There's a US election can't have it too uncomfortable for the politicians as they might get asked some awkward questions.

Wasn't it reported that oil supplies where up which is why the price was falling?

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I agree totaly and mass unemployment ( i cant see how that can't hapen ) will probably trash the housing market by %70 within 2 years.

Q2 2007, how right you were RB.

mass unemployment = less tax revenue + more Gov't spending = more deficit spending = more money creation = more currency debasement = higher commodity prices than many of you can imagine

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With reference to the gold price drop, sure it has dropped in dollars but in GBP that drop is tiny!

£1.95 per (Very weak US Dollar) I am not up for ramping but don't judge it on it's USD price, if you went gold to save your hard earned GBP, the current movement is not a big move, it will still cost £500 GBP per Oz for one of the much hailed britanians.

And that is before the big £ falls, seriously we have had a drop of 25% against JPY since peak and manufacturing is still not picking up?

If we aren't building houses, on a commision or seling luxury yahts to rich bankers GBP we are looking at £1.60 per (weakend) USD. ON a world currency (non dollar pegged) movement that is huge! and exports still aren't picking up?

Edited by Yoss

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The recent pullback in commodity prices—particularly oil—is expected to have a moderating influence on inflation in the coming months, providing some relief for consumers, the stock market and the Federal Reserve.[/indent]

GOLD

Does the inflation tank have much more fuel? Unemployment is around the corner as consumer demand plummets. Credit is getting tighter as the trillions of missing dollars and pounds take their toll. None of this bodes well for those seeking to raise prices. In fact, a deflating bubble may well end in a deflating economy where deflation once more rules the earth. You know it makes sense.

If the commodity drop turns into a full blown crash we could see a gold and oil route in a matter of days.

The way we know there is a recession is because copper has and is tanking.

Oil will go below 90 but it is an absolutely necessary commodity so it will come back up again.

Gold I hope will go below 800 but it is the only real money so it will be 1200-1500 by spring 2010. 3000 within 5 years.

Remember nothing goes in a straight line.

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mass unemployment = less tax revenue + more Gov't spending = more deficit spending = more money creation = more currency debasement = higher commodity prices than many of you can imagine

Nope.

Mass unemployment + less tax revenue + the desire to reduce inflation by reducing money creation (amongst other things) = lower public and state spending and cheaper everything.

Add a new Tory govenment to constrict state spending even further and you have the mother of all deflations.

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Thanks for the observations and predictions, FP and RB... I appreciate your predictions, especially since so far they've been proven right with a razor-sharp level of accuracy.

If we aren't building houses, on a commision or seling luxury yahts to rich bankers GBP we are looking at £1.60 per (weakend) USD. ON a world currency (non dollar pegged) movement that is huge! and exports still aren't picking up?

My job pays in dollars, I am looking forward to the 20% pay rise in the short term. Think I might get a bit more competition too though, so in the end it might balance out, or even fall.

Very hard to prosper during a recession, especially since I have a feeling the income tax bands won't change to reflect the devalued currency.

Edited by DementedTuna

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What do you think $3000 will buy you in 5 years? (apart from an oz of au)

Exactly, it will hold and increase purchasing power.

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Exactly, it will hold and increase purchasing power.

The trouble with gold is it is one emergency law and two headlines away from being utterly crushed in value at any time.

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The trouble with gold is it is one emergency law and two headlines away from being utterly crushed in value at any time.

I agree with this. Im sure il be tempted in the coming days and weeks, but ultimately what puts me off is the obvious manipulation. Ill think again when it goes below 800...

edit: spelilng

Edited by CrashingPumpkin

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http://biz.yahoo.com/cnbc/080805/26035811.html
CNBC
Does the inflation tank have much more fuel?
Um, the govt printed £3bn only today...
Actually it's really interesting, there's arguments on both sides. Deflation sounds great for me personally, and unpayable debt supports that thesis, but is bad bad bad for the economy long term. I tend to agree I can't see huge inflationary
demand
, but bubble-propping seems to be on the cards by whichever desperate vote-grabbing scheme they can think of.
We live in interesting times for sure.

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but ultimately what puts me off is the obvious manipluation.

Indeed, as with oil it has been artificially driven up by investors...........................or have all those people selling oil in the last few days just woken up and realised they don't actually need it?

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The way we know there is a recession is because copper has and is tanking.

Oil will go below 90 but it is an absolutely necessary commodity so it will come back up again.

Gold I hope will go below 800 but it is the only real money so it will be 1200-1500 by spring 2010. 3000 within 5 years.

Remember nothing goes in a straight line.

Copper is tanking, but remember if you are a UK earner it is not about the dollar price it is about the £ price, in £'s it is stll a safe bet as I expect we will seen 1.70-1.80 per USD by Jan.

I would like to see gold at £400 per oz, but suspect that mark has already passed, sure $800 usd no problem, but £400 gbp... Not a hope in hell. We have nothing to sell.

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I agree with this. Im sure il be tempted in the coming days and weeks, but ultimately what puts me off is the obvious manipulation. Ill think again when it goes below 800...

When there is enormous pain and complaints and you don't want to buy, that is the time to buy!

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