pseydocyst

Get Out of Commodities - Barron's

yeah, get out of physical gold and silver
and buy financials and their toxic waste paper.
what great advice

A Warning for U.S. Dollar Bears and Commodity Bulls

higher commodity prices are due to inflation of the supply of dollars.

Should your wealth be measured in FRN? That can be printed infinitely? Can you trust this gov't, ,that's corrupt to the core, to manage the nation's money responsibly?

Sure, there have been episodes of spikes in specific commodities, like palladium, or natural gas for example. But today all commodities are shooting up. This is due to the devaluation of the dollar. latest dollar index is 71.68. and it's going lower. Unless you think we've hit a bottom in the dollar index, you'd be wrong to bet on lower gold, silver, or oil prices, measured in us dollars.

The US dollar is simply not a reliable measure rod for wealth. You can't measure your wealth in US dollars due to rapid inflation. The only honest measure is gold, or silver.

Measure in terms of gold. The stock market has been in a bear market since 1999. If you were smart you would've held stocks from 1982 until 1999 and converted all the money to gold. You'd be rich. The gold bull market is not over. The equity bear market that is still far from over, imo.

Too Much Money Chasing Too Few Commodities

Kinda scary time we live in today. Looks like the commodity cycle is back again, just like the 70's.

Amazing to see all the grain prices just shoot up
so fast recently, soybeans, wheat, rice, all gone parabolic. My DBA I bought just 3 months ago gained 30-40% already.

Crude oil has gone up now to all time high of
$100. It seems all the other commodities are
just catching up with it. E.g. now it takes around
10oz of gold to buy 100 barrels of crude, or 5 oz of silver to buy 1 barrel of crude. This still somewhat undervalues gold and silver based on historical averages (~8 oz for gold and 3-4oz for silver).

Where oil is headed I think is the important question. If the central bankers have lost control, and oil heads up higher, you better have a huge position in gold and silver to protect yourself. Today the $US is backed by oil, which is in demand by all the other countries to buy oil. If somehow this system erodes, maybe the US FRN will be worth much less.

A second demand for the US dollar comes from the US stock market. But now we're in a bear market. The DOW valued in gold terms has been declining from an incredible 40 oz in '99 to less than 15 oz today. The money simply is not going into stocks anymore. The stock market (US) is deflating and going into commodities. But this declining stock market produces even less demand for the US dollar. Which produces a vicious cycle.

Overall the argument is just too compelling to put your money in gold and silver. Despite all the Gov't propaganda, with the manipulated/massaged CPI, all the market hype you see on CNBC, and business news channels, the reality is just too painfully obvious. All these financial asset's that have done well in the 90's, stocks, bonds, and even housing are basically wealth sinks, and only hard commodities that you can hold in your hand will protect your wealth from confiscation.

It'll be interesting to see what'll happen over the next decade, maybe the US dollar will become like the next Mexican peso. The middle class will be slowly wiped out and the wealth of the country will be in very few hands.