A Silver Shortage is rearing it's ugly head

Even though most of my "money" (little as it is) is in PMs, I still do hope the US will get their act together and correct the deficit problem. I don't see it happening, because no one wants to give up THEIR portion to balance the budget.

 

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Yeah, I heard a talk show the other day. Even though they were conservatives, they were railing against the idea of abolishing the dollar and 2 dollar notes and switching to coins because of perceived inconvenience. If even conservatives are unwilling to do a little thing like that to save money, how will anyone else give up anything?

 

he means he wants to put beads in your hair and sing hippy songs and maybe even live back in the middle ages when a piece of silver bough you a fun weekend at the local inn with the best woman that can be had and many shanks of lamb...

you know he is only full of love...man your silly...

 

how bad you think it would get? I mean to the worse extent bad too...

I happened to be born jan 24th 1980 so I missed out on the 70's basically...and I know I can do research and such...but you only get so far on that...the best information is straight from the folks that lived it.

 

he should go join the good folks hiding under the bed at www.goldismoney2.com.
This board is more in touch with reality I think.

 

In the 70s, there was higher unemployment than now, higher inflation, double digit mortgage rates, gas lines, crashing stock and bond markets, and most of the other stuff that people are afraid of now. The US lost the war in Vietnam [but pretended we didn't] and Communism was winning everywhere. Every time you went to the supermarket, every item was marked up 10 cents or more. Sometimes the same item on the shelf had 4 or 5 price stickers on top of each other, and you could get a bargain by peeling a few off to find a lower price [if you didn't get caught]. More than once I went down to the local gas station at 3:00AM to line up to get gas when the station opened at 6 o'clock. So did everyone else and there was a crowd of people in Dunkin Donuts waiting until morning. Ceasar's World common stock went from $2 to $100 and back to $2 again pretty quickly after they opened a casino in Atlantic City. The music industry tried to get rid of the rock bands because they wanted too large of a cut of the profits, so they created disco. Music really never recovered after that. Computer input was primarily done with 80 column punch cards that were processed in overnight batch runs on mainframe computers with less power than a digital watch has today. There were no PCs, but many offices had nice electronic adding machines and typewriters. There was a brief toilet paper shortage that caused a lot of panic for a few weeks. The draft lottery was pretty terrifying when I was 18 [I got 280!!!]. Company Presidents [there were no CEOs] made about ten times the salary of an entry level college position. And even though the economy was bad, companies would try to keep as many people as they could on the payroll as long as they were still profitable so recent college grads probably had it a bit easier than they do now. My friend from college made a pretty good living closing down bank branches for the FDIC. So things were pretty bad, but people adjust better than you might think. If the economy gets worse, we will adjust again. The biggest difference that I see now is that corporations and the people who run them don't care at all about employees, the communities where they reside, or even the nation. There are no Sam Walton's or Lee Iacoca's in American business anymore.

Edit: The casino stock might have been Resorts Internationa, not Ceasars. I don't recall. And I met Bill Bradley at the train station one morning when he was running for Senate. It was early and nobody else was around so we talked for about 10 minutes. I also [almost] got to shake hands with Richard Nixon at Yankee Stadium one day, but a NYC police officer hit me when I got too close. My cousin and I would go to hockey games, buy the cheapest tickets, then go downstairs and pay the usher a small "fee" to put us in empty seats behind the bench. Those were the days!

 

One might keep an eye on copper. Infrastructure damage in Japan may well be the stimulus to get copper started on a rebuilding basis. Rise started shortly after the quake/tsunami, so our copper price quote seems to ignore it came up by 6 cents really rather than the 2 cents shown in US market. They won't need PM much for rebuilding. IMO.

Jim

 

I saw a report today that says Japan holds almost $600 Billion in US debt. The earthquake/tsunami may force Japan to stop buying new debt and perhaps even cash some in to help fund the recovery.

Japan is a major foreign owner/buyer of US debt and a change in their position could "potentially" put upward pressure on US interest rates. That scenario would likely be negative for stocks and bonds...I'm not sure what that would mean for PMs.

 

I love it!

 

I am not saying this will happen again ... but from 1976 to 1980 when interest rates exploded upwards ... gold and silver prices also exploded upwards as well and reached all time highs. I think both of these vehicles (interest rates and PM prices) reflected higher inflation of the time.
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This is the most rational thinking. The every man for himself thinking in an unthinkable scenario would spell disaster for all.

 

That is because there are so many panicky speculators the scream, "the sky is falling" every time oil goes up $1, bad economic news gets reported, bad job reports surface, the Dow takes a small dive, or the unrest in another country with natural resources that help drive our economy. It is part of the reason silver is being hoarded currently. Don't get me wrong, Canada felt the recession, but it sure seems like the country as a whole acted a bid more rational.

 

Exactly, well stated. Although I do not expect a suddenly fiscally responsible result from Washington. Also if QE2 really does begin a taper as we move closer to June, I believe we could see a significant (10%ish by Aug/Sep) pullback in the stock market. If QE2 is extended or QE3 is announced, I believe the market will continue to move higher.

Bluesboy65

 

I kind of follow the bond market but, I've been so wow'd by the geologic disaster, I had not yet considered this. A lot of dynamics here, higher bond yields is bad from a debt servicing standpoint but may attract more foreign investment. However, this is happening at a time when foreign investment is waning. 70% of bonds are currently being purchased by the Fed and Japan has been major player in the remainder. A lot of moving parts, and wow, Bill Gross may have the most amazing market timing ever! It will be interesting to observe market reaction as all of this is digested by financial markets.

Bluesboy65

 

I see another article that suggests any downturn in sales of US Treasuries (due to events in Japan) will be made up by a global "Flight to Quality". Apparently, the US dollar is still considered "quality".

 

I know its scary, but lets look at the alternatives. The Yuan is not an international currency, and even if it was remember they are still Communist led, and policy there is dictated by their own currency concerns. The Yen, even before the tsunami, is strong currency but extremely dependent on exports by a rapidly aging country. The Euro is getting strong pushback by their weak players on austerity measures. "minor" currencies like CDN and AUD are dependent on natural resource exports, otherwise are weak economies.

What alternative currency would you buy in times of troubles? You can disagree and say CDN is a better bet, or the Euro will fix itself, but all other currencies either have problems or are dependent on international economic growth to keep their value. If you take away, I don't see a better reserve currency. No, I do not consider PM's to be a reserve currency, it is far too small for the dollars we are talking about. About a day of international currency transactions would buy all of the gold or silver in the world.

 

I agree, it's a huge existential problem for savers and investors. Savings and investments have to be somewhere and denominated in some currency, and this is one of those times when everything looks bad. Even the Swiss are trashing their currency to keep domestic industry competitive, but otherwise will probably be okay in the long run. So for better or worse, the USD might just be the best currency for relative safety.

 

The number of dollars is irrelevant to gold being used as a reserve currency. This is the point of using a fixed asset. Remember when the Zimbabwe Central Bank was in it's last throes, it was printing 100 trillion dollar notes.

World governments don't want to use gold (or any PM) for currency simply because they lose a huge component of control over everything. This is the whole point of fiat money.

 

Yep

 

I don't want them to have control; I want them to make policy as dictated to them by sound fiscal management. If we screw up and need a recession, let's have it and get it over with!