Daryl Montgomery

Silver Prices Are About to Fall

Silver at $11??? This reminds me of the Elliot Wave people who predicted late in the spring that gold would fall to $600. Instead it turned around and went to $1100. There are a lot of, "I believes" in this article, without specific date ranges or hard numbers. People can believe anything (and they do). What are the probabilities of each of these beliefs happening at the relevant points in time? Once you multiply all those probabilities together is the overall number much greater than zero? Where are the hard facts to back up the predictions? Charts? Numbers? The contents of this article appear to be nothing but a bunch of baseless suppostions.

Profit from Weak U.S. Balance Sheet: Short Government Debt

While I am not optimistic, your Doomsday scenario isn't necessary to get the commodity prices you predict. Simply printing too many dollars and supply issues will do it. As for raising interest rates to Volcker levels, if the U.S. did so, the interest payments on the national debt would absorb all federal tax payments and there would be no money left to run the U.S. government. So we would have to print the money to do so, which would lead to more inflation and still higher interest rates. That would be the end game.


On Nov 05 09:42 AM Mad Hedge Fund Trader wrote:

> ndu I know what keeps Obama awake at night. Let’s say we spend our
> $2 trillion in stimulus and get a couple of quarters of weak growth.
> Then once the effects of the stimulus wear off, we slip back into
> a deep recession, setting up a classic “W.” Unemployment never does
> stop climbing. This happened to Roosevelt in the thirties. So congress
> passes another $2 trillion reflationary budget. Everybody gets wonderful
> new mass transit upgrades, alternative energy infrastructure, and
> bridges to nowhere. But with $4 trillion in spending packed into
> two years, inflation really takes off. The bond market collapses,
> the dollar tanks big time, gold goes ballistic to $5,000, and silver
> explodes to $50. Ben Bernanke has no choice but to engineer an interest
> rate spike, taking the Fed funds rate up to a Volkeresque 18%. Housing,
> having never recovered, drops by half again. This all happens in
> the 2012 election year. Obama is burned in effigy, a Mormon is elected
> president, and the Republicans, reinvigorated by new leadership,
> retake both houses of congress. We invade Iran. Crude hits $500.
> This is not exactly a low probability scenario. Remember Jimmy Carter?
> This is why junk bond yields are still stubbornly high at 12.5%,
> and credit default swaps live at lofty levels. Are the equity markets
> pricing in this possibility? No chance. The risk of Armageddon is
> still out there. Personally, I give it a one in three chance. Pass
> the Xanax.

Is the U.S. Banking System Safe?

Almost every point in this article was covered in the fall of 2007
by the New York Investing meetup, up to and including our predicting the insolvency of Fannie Mae and Freddie Mac. We agree that the U.S. authorities are attempting to copy the 1990s disastrous Japanese policy decisions for the U.S.banking system. However, we disagree with other analysts in that we are predicting the U.S. will experience a major inflation episode instead of the deflation experienced in Japan.
- Organizer, New York Investing meetup

The Current Market Atmosphere: Easy Money Hard to Come by

The most important statement in this article is: "The "experts" made available to the public have and will never alert you in a timely manner". This is why the average investor can never make money in the market. The people who do make money understand this concept well and pay no attention to the investment advice offered through the media.

Nasdaq vs. Homebuilders vs. Oil

This article is comparing apples to oranges and is ridiculous. While a Nasdaq comparison is reasonable, the Nasdaq rally began in 1982, not 1994, with the beginning of a secular bull market that lasted 18 years. There is no reason the oil rally can't last 18 years as well and that commodities are in an 18 year secular bull market. The oil rally actually began at the low in 1998, so that would give it a potential 8 more years (if you wish to date the beginning of the secular bull in 2001, then 11 more years) based on the reasoning of this article. As for comparing homebuilders, the factors that affect their prices are not the same as those that woudl affect the price of a commodity. That comparison is completely invalid.

The Fed is Deflating: 10 Reasons Why

This is quite possibly the stupidest thing I've ever read online. Deflation as described in this article is actually a key component of hyperinfllation, which takes places when the monetary base doesn't expand nearly as fast as prices increases. In Weimar Germany, the monetary authorities and top economists constantly made the same argument made in this article, claiming deflation was really taking place just as inflation was beginning to skyrocket, just as is happening in the U.S right now. The fools that listened to such idiocy were wiped out.