Commodity bubble ???

The Shop Rite near me is still giving away turkeys for free if you turn in $300 of receipts -- same as for the last decade. No sign of inflation there.

 

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I agree, the dot com bubble was not panic or frenzy, but more like Mr. Greenjeans said, irrational exuberance.

 

I loved mr Greenjeans, bunny rabbit & Mr Moose....but the captain I watched him everyday!

 

Not to make light of the U.S. economic situation,but up here in Canada it used to be,whenever you found a U.S. coin in change received it was something you took home and set aside in a seperate container.It was a rare occurance but not any more.
Just a sign of the times..................

 

Rush - how long ago are you talking about? I am not sure a single curreny pairing provides enough information for an accurate conclusion on US economic and fiscal policy. In fact it could be giving you more indication about canadian affairs.

 

Hmm, depends on what "product" you buy. The bottom line is, bullion gold coins are VAT exempt while many collector coins are not. The exemption applies to (quote from the directive) "gold coins of a purity equal to or greater than 900 thousandths and minted after 1800, which are or have been legal tender in the country of origin, and are normally sold at a price which does not exceed the open market value of the gold contained in the coins by more than 80 %" ...

For those who are interested in the details, this is the full text of the Council Directive:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2006:347:0001:0118:EN:PDF
A list of coins that meet these criteria is published every year; this is the list for 2010:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2009:289:0012:0025:EN:PDF

As mentioned in that document, a gold coin which is not listed there may still meet the exemption criteria.

Christian

 

Well, the only reason rice is down is because annually we export 5.8 BILLION pounds of rice. Mostly, to the countries that you see represented at your local Wal-Mart (China, Mexico, India, Thailand, etc.). Most of those other commodities are sold by Americans, processed in America, and sold to Americans. So when you go buy cheap junk at Wal-Mart, just remember the savings is coming out of America's pocket. ;-)

 

What part of which country is unemployment over 25%? I live in a small town in Wisconsin with a large manufacturing base, so we were hit pretty hard by this recession. I was one who lost my job. But we never hit anywhere near 25% unemployment.

 

Rush212,

I have been separating Canadian and American coins for a few months now. I knew the day would come when the Canadian dollar surpassed the US dollar in value. I am even thinking about investing in actual Canadian dollars (not ETF's), because I think when our government is done with the dollar it will be almost worthless.

I have most of my savings in dollars, because I am looking to buy a house/property. I think US property may stay low even as the US dollar depreciates (demand), so I am in no rush to buy. Also there are deflationary aspects on the horizon that I see that will affect the world economy (not too long term).

I am a little nervous about a commodity bubble now, but like others have said the US government is trying to monetize our way out of debt so it is hard to figure out what part of commodity prices are going up from fundamentals (demand from emerging markets and the US dollar devaluing) and what part is purely speculation.

 

He is talking about U6 numbers (how they used to calculate unemployment), not the governments current calculations (which is a lot lower).

 

I still do not see 25%, sorry!

 

Here is one document site on the 25% + of a county in California in the US. These rates do exist in more areas than realized as they are not big name counties.

Jim
http://www.google.com/publicdata?ds...50&dl=en&hl=en&q=imperial+county+unemployment

 

Sorry for any miscommunication. I do understand that many communities with largely unskilled labor forces were hit pretty hard by this recession. I guess I kind of missed your point for that statement.

 

I would call it a rational flight to real assets rather than a bubble but all it will take is one loud noise to spook the herd and then it's off to the races. As long as the fed and government continue to try and re-inflate the real estate market the problems will continue, commodities will keep going up and the amount of pain required to get through this will only get worse.

In a related note, QE2 explained (mildly bad language): http://www.youtube.com/watch?v=PTUY16CkS-k


And our legislators and economists all need to hop on a bus and head north. If they ask very very nicely maybe the Canadians will tell them how an economy should be run because they weathered this with flying colors.

 

Gold is not a commodity in the conventional sense in that it is not "consumed" as it is the most recycled material on the planet. The only thing that changes is its form and who is holding it. The mass of gold on this planet has long outlived countless governments and their paper fiat currencies. The time to hold gold is during times of uncertainty when the ruling powers whether it be kings and their royal courts or wall street robber barons, start devaluing the currency to take wealth from those who still have it. It's up to the reader to decide if we are in one of those times or not.

IMO, we won't be in a bubble until the Americans who foolishly sold their gold (only to see it flow overseas) desperately try to buy it back. The train will have pulled out by then, as history has proven over and over, the ones who bought the tickets early are the ones who got the best prices. When you see Walmart selling out of gold coins, then you might want to think about selling the gold you hold because the bubble will finally have arrived. Until then, we are not in a bubble.

 

http://dictionary.weather.net/dictionary/commodity

Of course gold is a commodity. Is your gold any different than anyone elses? Simply because you do not say its consumed does not mean it is not a commodity.

I for one do not remember a frenzy in silver in 1980, just a lot of quick action when the market topped. There were no lines to buy silver or gold in coin stores. More people were selling than buying. Why must people be in a "frenzy" to dictate the top of a bubble? Going up sometimes there is a frenzy, but a lot of smart people recognize overvaluation along the way and get out before the peak. I usually see less activity at the peak than going up.

 

Yes you are right, if you are buying a gold coin not listed it is VAT free here in Europe.
Good working for small pieces of gold round 1/10 oz - 1/4 oz, for example common dates of Austrian or Hungarian gold 10 and 20 corona, 1 and 4 ducat.

 

Did you even read what I posted? I explained this in my post and you waste our time posting links to the dictionary. (BTW, Websters is the only definitive source for American English) People buying in a frenzy is not what causes the bubble, it is a sign of a bubble. In both cases I never stated what you have responded to.

 

I don't think the the rising in PM's are going anywhere but up. more so if the fed's go through with their plan to buy more treasury bonds which is why prices could be spiking now.

i think the reserve is pre-pairing to print 500 billion or so US dollars to buy a bunch of treasury bonds. they are counting on the banks and other financial institutions to lend this money out. all i see is people stiring more towards PM's and other commodities to hedge their bets on inflation. i don't think silver or gold are going down any time soon.

 

Someone mentioned to me this morning, anecdotal - I haven't verified it, that one day last week the volume of corn traded was over 11 billion bushels. In 2009 the total US production of corn was 13.4 billion bushels and 2009 is the highest corn yeild on record. So in effect an amount equal to the entire US crop was traded in the futures market in 1 day. Last week cotton hit an all time high Dec10 futures over $1.50 a pound. The fall in industrial metals yesterday caused me to lower my prices on all non-ferrous material, copper (aluminum, stainless steel, brass and etc) at my scrap yards 3 time throughout the day. I also nudged down the price of scrap iron/steel just to play it safe.

I feel due to the bull run in PMs that large institutional traders and hedge funds are now moving into other commodities. They are making speculative trades which based on their own assets, resources and risk assessment are normal but actually consist of volumes these markets historically haven't dealt with. Reinhart Cotton a couple of years ago has gotten me bubble jumpy.