July 28, 2010
– Comments (6)
Thanks for the link. I am untrained, non-certified, and unskilled, but I always thought that interest rates were a function of the real rate of return plus inflation. What happens when the world realizes tha the emperor is not wearing clothes and that US Treasuries do not reflect risk?
Not a gold bug, but "my take on this" is that dollar based commodities have the potential to increase exponentially. This has not occured because in the land of the blind the "one eyed man is king" and in periods of uncertainty investors continue to flock to treasuries for security and the dollar has not suffered, and has in fact strenthened. In addition, there has been a direct correlation with the perception of the economy and energy prices. Picking Energy/OIl up and banking down ensures that you will remain in neutral from my experience over the last year or so.
Schiff is right in the fact that the US needs to take its medicine. A real correction in the standard of living is necessary and will occur. Interference only delays the correction, and I believe he is correct in saying we are in an artificial economy.
How that pans out for investments I do not know. The question I ask to members, if the illusion is shattered, and the investing world realizes that the emperor is not wearing clothes, where will the money flow? It will go to something, whether it is gold, silver, chickens etc, it will go to something that is valued. Unfortunately my feable brain considered Gold and Oil(dollar based commodities) as potential relief points, but Oil is moving directly with the perception of the ability of the economy to recover. What is the path of investors in the future for security? The lemmings will all move in tandem, where are they headed?
I have an idea where all the lemmings will be headed in the medium term. My question to you, today, is where are you headed? Gold, Oil, Foreign Bonds, etc?
simplemts, Been wrong the last 18 months, hesitant to make predictions, personally I believe that interest rates or yields on Treasuries have to rise to reflect risk. I said this before however, and in fact the dollar strenthened and interest rates fell.
What do you foresee?
On July 29, many small gold miners will begin reporting their earnings. If TMFSinch is correct that relatively high gold prices and relatively low energy costs will help these small miners beat expectations, this will be in the news for the next two weeks. Many investor looking for a place to hide their investments may look to the gold market for at least a short term haven. The heard mentality may then perpetuate the rise for the next several months.
I saw a report or blog several months ago that China was starting to sell long term Yuan bonds, possibly through WalMart. This may be their way of introducing the Yuan as an alternative to the US dollar as the world reserve currency. Until then, gold and silver metals (not ETFs) will probably stand still as most if not all the world fiat currencies take a step back when a volenteer is needed for the next world currency.
We won't have long to wait so see if this play out. My bet is already made.
The rise in gold will insinuate a weak dollar, and economy. We have to make it seem as though people are not scared, and rising gold is not the way. The government's credit rating will fall, and they will have to pay more to borrow.
I'd really like to see a debate between Peter Schiff and Robert Prechter
RM, they are both right it is just a matter of timing. Prechter is right now...as we will all probably see tomorrow with the high probability of a huge downturn starting with a bleak GDP figure...this will spark the return of deflation. But, a couple years down the line a bond market and dollar crash is extremely likely...this is what Schiff talks about.