The FED did a pretty good job of pretending precious metals prices didn't matter when they were headed skyward a few years ago. What about now that the price is in a bear market by any measure? Along with the near collapse in oil prices, the dreadful word "DEFLATION" has to be on many of the central banker's minds if not their lips. I suspect we are just one real crappy jobs report away from a massive amount of fiscal stimulus both from the FED and Obama (with or without the consent of congress).
It is very likely that this is the case. Let's see how it plays out in the next few months. Some factor that hasn't been accounted for may come in to save the day.
All of the cash-for-gold places are folding-up here, several have converted to "vape" stores selling smokeless cigarette paraphernalia. One became a storefront crematory complete with potted ferns in the lobby...,, Once they're all gone then the rally will commence.
Deflation is great for those who don't owe any money. Of course, if you want to inflate your way out of debt it's not so hot.
I'm simply confused on how we're in a deflationary period. When Obama took office in January 2009: Silver was trading at ~$11/oz. Currently, it's trading ~$15/oz. Gold was trading at ~$875/oz. Currently, it's trading ~$1150/oz. Oil was trading at ~$50/barrel. Currently, it's trading ~$68/barrel. The way I see it, commodity prices are about 40% higher than they were six years ago. 5.8% inflation annualized over the last six years. Given we were worried about a recession and extreme deflation, that's not so bad. I don't think we're facing headwind of deflation, so much as we're experiencing a correction due to the untangling of QE. We're fine. Unfortunately for non-US economies, they ended up taking on our losses in the form of housing inflation, but the US itself is fine. QE had the anticipated effect (inflation 50-100% above our 3.2% comfort zone), and the economy didn't collapse. The economy may show some degree of stagflation as we unwind, but the shock won't be strong enough to cause deflation. We're simply experiencing disinflation. Inflation is still positive, just not as much as we target for. We'll probably see another three years of inflation in the 1% range, until banks finally accept that interest rates must go up again. The sky isn't falling and more than it was when silver was supposedly going to $100.
Unless "Coin Chat" has become an investors forum lately, it is not quite the right the place for discussions like this one. Moved to Bullion Investing ... Christian
Funny that you mention that - the gold buying store here did exactly that! You can get all your vape accessories and juices there now.
Inflation is a funny thing. It hits everyone differently. The stories I hear from parents about what it costs to have kids in highschool or day care is amazing. $1200/mo for two small kids in daycare.
Yup, and that doesn't include changes to employer based healthcare coverage that makes having kids or a non-working spouse another $800 a month "luxury" for a couple with 2 kids. Meanwhile, nice bounce on the metals this morning. Not nearly as bad as when they opened in the wee hours this morning.
I'm starting to suspect I live on a different planet than some of you, as I don't see any of that happening here. Maybe I've just been fortunate.
Maybe just different neighborhoods. I never had any cash for gold places near me, but saw them in other areas. I am not trying to sound elitist, though I know its sounding that way, its just a fact cash for gold places never appeared in some suburbs here, but were very common in other suburbs and the cities here. I think most people who wished to sell PM around me either went to jewelry stores or coin dealers to sell.
I think that all depends . . . on whether the report you refer to is the one the BL&S receives, or the one it issues . . . those can be two entirely different reports, depending on who is pulling the strings.
Holy smokes, what a rock-n-roll 24 hours it has been for the metals! Well, it would kind of make sense that some sort of recovery is in the works at this point, maybe the end of the down cycle for the economy as a whole and not just metals. If you look back to the Reagan era, while everyone was heaping praise on his stewardship of the economy, the truth is the recovery probably had more to do with crashing oil prices than anything else. Now that the energy "tax" --and that's pretty much what exorbitant oil prices are, a tax-- has expired, who knows what kind of bounce we are all in for once that liberated cash heads to other corners of the economy. Stands to reason the airlines would benefit enormously, lower costs and higher demand via discretionary vacation spending. Also stands to reason that rare coins would be a better investment at this point then bullion, but then that's been the case for a couple of years now.
Could it be that North Dakota's rise brought about the purposeful glut by the saudis that invariably caused a crash in oil prices (and production in North Dakota) that pulls the economy up finally? That would be a mind blower. Lots of wild guessing in there, but wouldn't that be ironic? Many have said our energy boom would lead us out of the jobs and spending slump. Is it possible that the halting of our energy boom could also lead us out of our slump via low oil prices?
One only need look to what the economy of most oil rich nations are like to understand resource based economies are not very stable, nor do they very efficiently spread the wealth among the population. There are exceptions of course, Norway for instance. But even there, the diversification of the economy has more to do with their standard of living than massive energy exports. Nigeria tends to be a more mainstream example of what a petro based economy looks like, with massive wealth disparity and all the mayhem that accompanies it.
We are an oil based economy, only we are the dealer. Most nations need to change their currencies into dollars in order to buy and sell oil. Russia and China have a side deal, but most countries are still in the petrodollar. For now anyway...
I agree. Economic prosperity has time and again been shown to be a function of good governmental policies, (fair court system, IP rights, certainty of property rights), and an educated, hard working populace. The amount of natural resources a nation has is very nearly meaningless. The number one thing all countries on earth could do to improve their standard of living would be to implement governmental policies that rewarded hard work and property rights. There is no mistake in that the poorest area of the world, (sub saharan Africa), has the absolutely lowest scorecard in this regard. They are natural resource rich, but government policy and corruptioin keeps them poor.
