myWealth.com

China's Latest Hunting Trip

Don't remember where I talked about backwardation. I did talk about gold rising and have mentioned it since at least the mid $800s on various sites including my own at mywealth.com. But I'm not ignoring anything because I don't even usually mention backwardations, contangos, etc.

People can go there and go back and see the several articles in full that I've written on the topic of gold.


On Feb 24 01:06 PM paultaut wrote:

> Two weeks ago both Trace and MyWealth were pushing a Theory called
> Backwardation.
>
> According to this theory, Gold would move up because Spot Gold was
> higher than Gold Futures. Gold went into contango and went up.<br/>
>
> Both Parties now ignore what they previously pushed. Mind you, this
> was just two weeks ago.
>
> What I would like to know is: "Is the Theory Dead or waiting to be
> reborn?"
>

Today's Commodity Prices Forecast Tomorrow's Inflation

Even though we disagree, thanks for reading and for your comments.


On Jan 29 01:20 AM paultaut wrote:

> Auto44: I am by no means "all Knowing". GLD is a ticking time bomb
> as far as I am concerned. A few of their large counterparties no
> longer exist. There are no external audits of the amount of physical
> gold actually in their Vaults.
>
> In other words, there is no transparency. You take it on "Faith",
> I do not take anything on faith other than the existence of God.

>
>
> You want to stay bullish on gold, go with UGL.
>
> There are a few SA Article writers who deal specifically in charts,
> none of them has noted the H&amp;S bottom proclaimed in this article.

>
>
> Now, If you are referring to the common stock of Randgold (seekingalpha.com/symbo...),
> then there is an H&amp;S bottom in progress. But then that's not
> the chart being depicted.
>
>
>

Today's Commodity Prices Forecast Tomorrow's Inflation

Feel free to check out our courses at mywealth.com too. I think they will be of great help to you. Thanks for commenting.


On Jan 29 12:31 AM Tedspick wrote:

> Unfortunately I recognize myself as one of those "retail" investors,
> always late to the party and one of the reasons is simple fear to
> plunge in before the trend is so obvious that it ends up nearer the
> top of the bubble. Thats why this post is so interesting to me and
> I am looking for true early warning indicators. A new one for me
> is the "Baltic Dry Index" which is showing a rather clear bottom
> formation and even the start of upward movement. This action looks
> distinctively unique when comparing it to the chart over the last
> several years. I have read that when raw materials start moving
> it is a sign that manufacturing increases are on the way. Another
> advance indicator for eventual inflation.

Today's Commodity Prices Forecast Tomorrow's Inflation

Oil was risky at $147.

However, at $30-$40s...that risk is greatly diminished.

Thanks for reading and commenting. I appreciate it.


On Jan 28 11:39 PM beegdawg007 wrote:

> I think you are right, but very early in your forecast. When this
> finally occures, I believe the way to play it is Steel and Coal.
> When things again start to rip, Steel will move first because most
> of the stumulus plans in the world, particularly in China, are focused
> on infrastructure building. That means rebar, beams, rail, siding,
> ships, storage tanks, new cities, power plants..etc.. All will require
> mega tons of steel. Every ton of steel requires .6 tons of coal
> in the form of Coke. Cement for concrete is made by heating limestone
> to 1500 degrees for a long period of time. That is most often done
> with coal as the heat source. As for electricity, between India
> and China, there are now 500 new coal powered electric plants in
> process. This is why I prefer steel and coal over oil or gold.
>
>
> As for your comment... ""For instance, the downtrend in gasoline
> futures has been broken and the cheapest gas prices are now behind
> us. This is largely due to the stabilization of oil prices of late.
> Oil appears to have found a floor around the $30 to $40 a barrel
> range.""
>
> The cheapest gas prices may be behind us, but the reason is primarily
> do to the fact that refiners have finally reduced production. They
> are now running at about 85% efficiency. There is finally a reasonable
> crack spread between oil and gas. That is what is now pushing gasoline
> prices up, and that is why the refiners have recently rallied.

>
>
> I do not believe that there is a world wide shortage of oil. There
> were never any supply problems. Oil was up because it bacame a specultive
> play. Just look at the enormous increase in the number of future
> constracts written in the last two year vs. earlier years. The volume
> tripled. In additon, in the next few years, a lot more oil will
> come to market via the Ukraine, Iraq, Brazil and, believe it or not,
> North Dakota in the short run. In addition, all the major refiners
> can now process considerable quantities of Heavy and Sour crude.
> This opens up an entirel new supply avenue. Bio fuels are now being
> made everywhere from anything which contains sugar, starch or oil.
> In California, biofuel is being made from used fry oil and animal
> fats. In Indonesia, cola nuts are a source of bio fuel. And syn
> fuel projects (coal to diesel) are springing up everywhere. And,
> we certainly should not ignore the fact the world is placing a huge
> amount of emphasis on improving automobile effeciencies. There are
> now many gasoline powered cars which get over 30 mpg. The new plugin
> electric cars whic will soon be offered by nearly every major automobile
> company, will go the first 40 miles on electric power (coming mostly
> from coal powered electric plants). Since the average driver, on
> average drives less than 40 miles/day, over their lifetime, these
> cars will actually use 70 to 80% less gasoline. T Boon Pickens,
> Mr. Oil himself, thinks the US should swich commercial vehicles with
> large fleets such as UPS trucks, US Postal trucks, Telephone and
> Cable companies etc. to Natural Gas. That makes economic sense
> for the companies to do this when you consider that 1 therm of NG
> which currently sells for about $4.50 provides the same amount of
> energy as 7 gallons of gasoline. All that really needs to happen
> is for these trucks to become available out of the factory with motors
> that are setup so that they will run on NG. This is a minor cost
> at the factory but it is a $2000 conversion if put on later.

>
>
> I think investing in oil is a risky bet right now because the world
> finally realizes that oil is the source of most of the political
> friction in the world.

Today's Commodity Prices Forecast Tomorrow's Inflation

You might consider a copper ETF like JJC. There may be better ones out there with higher volume..not sure. But an ETF would be my approach.


On Jan 28 10:03 PM Dissenter wrote:

> Sean,
>
> Thanks for your input on copper. I would like to buy physical copper
> for the same reasons why people buy physical gold. I have a fear
> that if the dollar goes bust all stocks with go with it hence the
> desire to own physical copper but is it worth it versus owning a
> copper stock company instead? If so how would I go about obtaining
> the physical copper?

Today's Commodity Prices Forecast Tomorrow's Inflation

Nothing wrong with copper either. Gold is the "true" currency and that's why paper money used to be backed by it. Therefore it makes people feel a bit more comfortable with it...and it's the one traditionally known to be the inflation hedge. Gold is highly liquid and its quoted everywhere it seems.

But nothing wrong with investing in copper at all. It's at the long term support on the 5 year chart. Inventories do need to be worked down...but once you get the global economy ticking just a bit better, people find out that the world is a big place and can start soaking up those inventories.

I like those charts. Thanks for sharing. I appreciate you reading my articles.


On Jan 28 09:11 PM Dissenter wrote:

> Why is everyone so into Gold? I'm thinking copper will be a better
> play. If you invested $1000 in physical copper in 2004 and sold at
> its 5 year high you would have made $3000. If you invested $1000
> in physical gold in 2004 and sold at its 5 year high you would have
> made only $1500.Sure copper has surplus inventories that needs to
> be worked through but I'm thinking long term. Gold may have its time
> to shine in the world markets but I think it will be short lived.
> Also with gold one to has to deal with higher amounts of volatility,
> fear of confiscation, and central bank manipulation of gold prices.
> Here are the charts for gold and copper:
>
> www.kitcometals.com/ch...
>
>
> www.kitco.com/charts/p...

Today's Commodity Prices Forecast Tomorrow's Inflation

The printing by the Fed that far surpasses all other central banks is the main thing that is the dollar's undoing. But by that, I just mean it will go down...some talk like it will go away. Not so.

Even when the British pound ceased to be the world's reserve currency its still a valid currency...just not near what it used to be...and may never be...




On Jan 28 05:50 PM Maximus wrote:

> I don't purport to be an economist but I have taken the standard
> MBA curriculum in finance in economics. Therefore I have been pretty
> on the fence as to my own view on inflation or deflation.
>
> I do lean toward the coming inflation argument. The most interesting
> refusal of this argument that I have read is even with all the new
> money pumping and approved bailouts, the public sector debt to GDP
> ratio of the US will still be below that of other OECD countries.
>
>
> If this is true, then it does not necessarily portend the end of
> the dollar and hyperinflation. If Italy can live with 150% debt/GDP
> ratio then why can't the US?
>
> Anyway, I have no idea if these numbers are correct and am too lazy
> to do a Google search.
>
> And I was hoping that someone with an understanding of this issue
> might address it...

Today's Commodity Prices Forecast Tomorrow's Inflation

Stock piles can diminish quickly once growth resurfaces.


On Jan 28 04:16 PM paultaut wrote:

> MyW: okay, play it your way. Commodities work on the same principal
> that equities do. They have to be bought to rise. Stockpiles continue
> to go up in all categories except Gold which is an Inflation Play.

>
>
> As stockpiles rise, the future inflationary aspects are reduced.
> IMHO

Today's Commodity Prices Forecast Tomorrow's Inflation

I think inflation to possible hyper inflation.


On Jan 28 03:02 PM nmelendez wrote:

> Think more in terms of stagflation vs. inflation. We are about to
> repeat the 80's.

Today's Commodity Prices Forecast Tomorrow's Inflation

All aren't smart. But many are....and that's why they'll end up surviving when your average retail client just blows up. The media just shows you the worst...but not the typical.

It's like the news...you'll see the crime in the city on the news....but not all the good that people do.


On Jan 28 02:58 PM auto44 wrote:

> If institutions are so smart why did they all get creamed in the
> downturn showing 30 50 70 percent losses and worse.

Today's Commodity Prices Forecast Tomorrow's Inflation

Yep, sounds like a plan.


On Jan 28 01:18 PM MGA_1 wrote:

> Shoot - i think the fed + govt intervention were the precipitating
> force behind the housing bubble, but nothing to be done now except
> let it deflate.
>
> Right now my plan is: short t bills then into gold.
>
> You talk about commodities - futures/options? EFTs?

Today's Commodity Prices Forecast Tomorrow's Inflation

Sometimes I am a bit early...that's why I invest with cash and no margin...but I've always found its best to be just a bit early than a bit late. I'll never claim to exactly call a top or a bottom but I do have a good feel for what will transpire in the months ahead and so I position myself accordingly.

Thanks for the comments. I appreciate you reading my stuff.


On Jan 28 12:00 PM Jimbo wrote:

> I am persuaded by the author's argument. He may be early but the
> future may unfold this way. Deflation is partly described as falling
> prices. Prices on cars and houses are certainly falling but many
> items associated with daily living are not. My electric utility just
> got approval for a 25% raise in rates. Several grocery items have
> downsized in weight and/or volume. Other grocery items have just
> increased in price. Several other electric utilities in my state
> have secured rate increases. As a consumer, my cost of living is
> rising faster than my income.I have pounded this drum before on SA:
> what we may be staring at is STAGFLATION.

Today's Commodity Prices Forecast Tomorrow's Inflation

So usually see me write from a "way to profit" perspective rather than my own philosophies. Because I know that they will probably ever enact my philosophies...because I believe the Austrians get it right in the long run.

I do believe what the Fed does helps in the near term but costs us dearly longer term.

Today's Commodity Prices Forecast Tomorrow's Inflation

I agree that the moves of the Fed are not permanent and as long lasting as we'd like. My focus is on what the effect will be in the next year or two and how to profit from it.

You see, I don't agree with how the Fed handles everything but I might as well profit from what they "do" rather than what I think they should do for the long term. Because my indifference to them won't change what they do.

I agree that the Austrian school of thought is more sound as well. But I also think that you'll (unfortunately) never see the Fed move in that direction. So I agree on the long term woes and bubbles to come based off of them trying to "save the day" today.

Once those long term effects eventually happen, you'll see me comment on those too and how to profit from them.

So while they aren't "right" in their approach...I try to focus on what they are doing and going to do and its effects. Then position myself ahead of time for the end result that they eventually will accomplish over the near term (1-2 years).


On Jan 28 11:53 AM MGA_1 wrote:

> If we have a turnaround it will only be temporary and because of
> a temporary injection of dollars. I'm a schiffian too - I don't
> think we'll actually see a true turnaround until the US balance of
> trade equalizes (i.e. we can export profitably again). Gonna be
> awhile. Plus, there's a hell of a lot of US debt that people may
> eventually want to cash in on.
> People talk about us being similar to Japan, I actually think our
> economy is closer to Argentina's in 2000. They saw a deflation will
> resultant bankrupcies then a hyperinflationary depression. I hope
> it doesn't happen, but we have a heck of a lot of debt - including
> govt.

Today's Commodity Prices Forecast Tomorrow's Inflation

We do agree on the fall of the dollar which also means rising commodities, foreign currencies like the euro and aussie dollar and this will also help many of our biggest corporations here in American that have a large international presence. So to that degree, it will help them too. On that we agree.


On Jan 28 11:37 AM clam75 wrote:

> Again, I disagree that a "turnaround" is coming for the economy.
> My thesis, like that of Peter Schiff, is that we're going to see
> an inflationary depression. Sure, gold, oil, and commodities will
> go up in dollar terms, as you state. I do not believe that the reason
> for such increase will be increased real production, though. The
> dollar's upcoming drop in value will explain it.
>
> I do not forsee hyperinflation the way that Peter Schiff does, but
> I do believe that the dollar is flawed inasmuch as (a) it is backed
> by nothing tangible, (b) it is being printed to death, and (c) there
> seems to be no discernible end to the fiscal and trade deficits we
> are now facing.