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Joseph Brom

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  • Determining the True Inflation-Adjusted Gold Price [View article]
    The analysis doesn't change because it is based on currency already created, not on reserves held by the Fed.
    Mar 16 03:48 PM | Likes Like |Link to Comment
  • Determining the True Inflation Adjusted Silver Price [View article]
    Lyn,
    Thanks for the compliment. I am deferring to people more knowledgeable on the specifics of these subjects than myself. About CEF's negative NAV, Harvey Organ thinks the banks are punishing CEF for buying more gold and silver. This may be true, but I'm not sure how one would verify this claim. I haven't read anything else about CEF's negative NAV, but will pass it along if I do.

    As far as the shortage, it depends what we mean by shortage. Israel Friedman and Ted Butler claim there will be a silver shortage. Their argument is that the above ground stockpiles have dwindled due to the supply/demand imbalance over the years. Thus today's above ground stock is around 500 million ounces (Friedman's estimate). As the 500 million ounces satisfies the supply/demand deficit the price will naturally increase. However, I think what they are suggesting is that there won't be a shortage in the sense that it won't be available. Silver will be available if you want to pay the high price.
    May 1 10:52 AM | Likes Like |Link to Comment
  • Determining the True Inflation Adjusted Silver Price [View article]
    Gold Economizer,

    You are exactly correct. I am assuming that the gold is there. The reason I made the assumption is that I wanted the article to be more rational than speculative/conspirato... Also that is the assumption that the market made in the 1970s and 1980s. However, if it is discovered that there is less than the 261.5 million ounces, then my analysis is on the conservative side which I am comfortable with.
    Apr 26 06:16 PM | 1 Like Like |Link to Comment
  • Determining the True Inflation-Adjusted Gold Price [View article]
    alf2011,
    Unfortunately, history proves you wrong. Gold has been money for 5,000 years because it is an asset with no liability. Federal Reserve Notes are liabilities. You're mistaking receipts for money with real money.
    Apr 26 12:12 PM | 4 Likes Like |Link to Comment
  • Determining the True Inflation-Adjusted Gold Price [View article]
    Donald,

    Thanks for the compliment. I agree they will trend higher. The inflation adjusted 1980s high really scared me. I hope that doesn't happen this time around.
    Apr 25 04:17 PM | 4 Likes Like |Link to Comment
  • Determining the True Inflation-Adjusted Gold Price [View article]
    Portal,

    The gold holdings wouldn't be cumulative because gold flows in and out of a nation as the first table illustrates. But you're correct about gold not being destroyed or consumed.
    Apr 25 04:16 PM | 4 Likes Like |Link to Comment
  • How to Protect the Economy From Impending Oil Crisis [View article]
    The problem with this analysis is that the real price of oil hasn't changed in 60 years. A barrel of oil was 1/15 an ounce of gold in 1948 and today it is still 1/15 an ounce of gold. What makes oil more expensive is the decrease in the purchasing power of the dollar.
    Mar 16 02:12 PM | Likes Like |Link to Comment
  • Gold Price Consequences [View article]
    Metalpipe,

    I'm not sure why we wouldn't assume "business as usual in the oil/gold ratio" especially since we have 60 years of data which suggest that is is usually "business as usual." In addition, since everything is based on historical data, the assumptions seem to be realistic rather than pessimistic.
    Jan 11 05:54 PM | 6 Likes Like |Link to Comment
  • U.S. Economy Will Suffer Simultaneous Inflation and Deflation [View article]
    I'll respond to you anyway, Fanatical Yankee,

    Your ad hominem attack is testament to the strength of the argument.


    On Oct 19 11:36 AM Fanatical Yankee wrote:

    > Your horrific ignorance of the most FUNDAMENTAL aspects of Economics
    > is matched only by the childishly presumptuous conclusions you draw.
    >
    >
    > One tip: Stocks are NOT "illiquid" assets, you CLOWN.
    >
    > Feel free to lash out at me in response. There is NO danger of my
    > bothering to return here to rebut it.
    Oct 19 03:56 PM | 2 Likes Like |Link to Comment
  • U.S. Economy Will Suffer Simultaneous Inflation and Deflation [View article]
    Thanks for the comments Jimbo,

    The observation that food and energy prices are increasing while stocks and housing are decreasing is noted by most people but the inflationists or deflationists. The main problem with the inflationists and deflationists arguments is that they don't take this simple observed fact into consideration in their arguments. Part of the confusion is assuming that the money supply is one thing which either increases or decreases rather than examining it in parts such as M0, M1, M2 and M3. When the parts are examined and the Cantillon effects are considered, you can see that you can have inflation and deflation simultaneously.


    On Oct 17 12:13 PM Jimbo wrote:

    > I have been seeing stagflation, an ugly reminder of the 1970s, for
    > some time. Things which people have to buy frequently, such as energy,food,
    > and other consumables, are rising in price. States and municipalities
    > are raising "fees" instead of taxes. But home prices, hard goods,
    > and other things seldom purchased are declining. Meanwhile, the availability
    > of jobs and salary increases decline dramatically. This is a formula
    > for much pain and social unrest. By the way, ten quarts of powdered
    > skim milk have gone from $5.99 to $7.99 in Florida, yet dairy farmers
    > in the northeast are selling off their herds because they can't pay
    > their overhead. Strange times.
    Oct 17 01:41 PM | 3 Likes Like |Link to Comment
  • U.S. Economy Will Suffer Simultaneous Inflation and Deflation [View article]
    IGDICK

    I'm not sure what "rigid formulas" you are referring to. The Gold/Oil ratio is simply a way of pricing oil in terms of ounces of gold. If you examine the Gold/Oil ratio since the mid 1960s, prior to 1971, the ratio was a very steady 1/12-1/13. After 1971, the ratio fluctuates between 1/5 and 1/40, but always reverts back to the long run average of 1/15. This isn't a "rigid formula," it is just what the historical data tells us. Actually based on this information, someone may be able to make some money by buying oil when the ratio is closer to 1/40 and selling when the ratio is 1/5.


    On Oct 17 12:12 PM IGDICK wrote:

    > ALL ATTEMPTS AT RIGID FORMULAS ARE A CHIMERA. IF IT ALL COULD BE
    > REDUCED TO FORMULA, WHO WOULD EVER LOSE MONEY IN THE MARKETS? OBVIOUSLY,
    > THERE IS ALWAYS THE BLACK SWAN, AND NO ONE KNOWS WHERE, WHY, OR WHEN
    > IT WILL REAR ITS UGLY HEAD!!!
    Oct 17 01:34 PM | 2 Likes Like |Link to Comment
  • U.S. Economy Will Suffer Simultaneous Inflation and Deflation [View article]
    Thanks for the comments chap08

    1. 1980 was chosen because in 1980 the M1 money supply divided by the 262.5 million ounces of gold the US claims to have equaled $850, so the market put the dollar on a gold standard. The subsequent fall in the gold price is explained by the fact that the Gold/Dow ratio was 1, which means gold was overvalued compared to the Dow so money moved out of gold and up into stocks according to Exter’s pyramid.

    2. I’m not sure what you mean by multiplying M1 with the Gold/Oil ratio. If we divide the current M1 money supply by 262.5 million ounces, the US claims to have then we arrive at the gold price under a gold standard. The Gold/Oil ratio fluctuates, historically between 1/5 and 1/40 but always seems to revert back to its long run average which is 1/15.

    3. Correct, money did go into the dollar and also Treasuries, but gold only fell 30% and is breaking new highs today, rather than the Dow or the S&P, which are still well below their highs. This suggests that money is in fact flowing out of the dollar and into gold as predicted by Exter's pyramid.

    On Oct 16 10:34 AM chap08 wrote:

    > " When the gold price adjusts for the 328% increase in the M1 money
    > supply since 1980, the gold price will be $2800. "
    >
    > Right. So you just picked 1980 by chance did you? Here are some facts
    > to help you on your way:
    >
    > 1. Gold was in a bubble in 1980. The size of this bubble can be judged
    > by the fact that after this price spike, it fell by 47% in 3 months
    > and 65% in 2 years.
    > 2. Gold, on average, maintains its purchasing power over time. In
    > your words "historically gold ratios have remained constant in the
    > long run". That means that multiplying by M1 does not give you any
    > meaningful prediction. So don't do it. Try building the growth of
    > goods and services in the economy, and the increase in gold supply,
    > in to your next prediction.
    > 3. The evidence shows that Exter's pyramid is false. The deflation
    > "scare" of last year did not cause a flight to gold. In fact the
    > reverse occurred. It caused a flight to the dollar and away from
    > gold, which fell by 30%.
    Oct 16 12:09 PM | 6 Likes Like |Link to Comment
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