DenisL

Gold's Not the Best Investment in Inflationary Times

Of course, Noriel Roubini thinks there will be
STAGdeFLATION!!
I guess this is because M2 and M3 are collapsing.

Question:
So what happens when these measures of money supply are going down AND M1 and the adjusted monetary base (ABM) are going up?

Answer:
Interesting times.

Way too interesting for me.
So I will buy some more gold until the "experts" sort this out.
Or better yet the market does.

Gold's Not the Best Investment in Inflationary Times

12345,
That is my thinking exactly.
We can not raise rates to Volcker's 20% levels to prevent inflation without risking default........
so we must get mass inflation.

The adjusted monetary base has doubled in the last few months. That is the money measurement that correlates best with inflation. Please remember that there is a 6-12 month lag between changes in the AMB or other money supply measurements and price increases. Inflation by DEFINITION is an increase in the money supply. Price inflation lags that money supply increase.

I do not see the alternative unless the Fed requires banks to increase their reserve holdings to higher than their current levels, which is possible but it would then throttle lending and business activity.

Alternatively, the Fed could issue Federal Bills, Notes and Bonds as suggested in a trial balloon recently. This would allow the Federal Reserve to pay high interest rates, soak up excess dollars, and compete with the Treasury's Bills, Notes and Bonds. This would be OK because the Fed would buy the government debt at low interest rates (keeping US government interest payments low) but the Fed would pay everyone else high rates. This would be blatantly inflationary long term but if they took advantage of the lag time it might work short term.

In any case, buy some gold. You are going to need it. This is NOT going to end well with a $50 trillion world GDP and $1.3 quadrillion worth of world debt obligations. The popping bubble is going to be a might loud. We ain't heard anything yet!

Investing in Basic Needs: Hedging Your Expenses

All good ideas.
Just hold cash a while longer.
This thing is going down a lot more, then the stocks above will be even better buys.

Gold Poised to Move Higher

On Dec 28 10:09 AM otbricki wrote:
> Sooner or later people are going to realize that value of gold is
> psychological only, and our past obsession with this metal will be
> regarded as a historical curiosity.

Yep.
And believing in paper money is also psychological. Our fellow humans CAN print as much as they want AND DO.

Physical gold can not be inflated.
EVERY country in the world is inflating its paper money right now.
Does that make you feel safe?
They are in a race to the bottom to see who can inflate the most and help their trade balance the most.

Does THIS help your psychology?

Look the choice of what to believe in for money is arbitrary. No system is perfect.

I trust the free market. I do not trust my fellow men, when they are politicians needing to print more money for war and for government programs to "help" our fellow man and to "help" get them re-elected!

Monetary policy, particularly inflation, has likely destroyed more countries and killed more people than war has, especially when you consider that monetary policies have led to many wars.

Let the market choose.

The Bedrock Case for the Return of the Gold Bull

Gold is a disaster hedge...not an investment.
It is for times of war, hyperinflation, banks failing and governments going crazy with spending. It is NOT an inflation hedge unless it is hyperinflation.

I still think we are in for some VERY rough economic water (at least another $1 trillion dollar loss in the housing markets) AND the powers that be will need a WAR to distract the masses from the economic problems/fallout. Before then we WILL see some price deflation. Hang on to your gold if you can not time this. Sell your gold if YOU can predict WHEN the next disaster will hit. In ANY case with the current folks in charge it is silly NOT to have at least 10% of your assets in gold at ALL times, more if you think, as I do, that disaster is looming. Deflation in housing prices WILL not help the heavily leveraged financial markets AND no one is predicting a rise in housing prices until late 2009 or early 2010, the housing bubble is still popping even if there is inflation in other areas. I think that one could sell gold now IF you believe we will NOT be in a WAR in the next year. AND then buy it back again once the gold bubble has popped. I do not have that kind of nerve. I will hold on to gold AND sleep better at night.

Gold Price Plunges: Might as Well Hold Stocks

Old conservative investors always believed that one should Hold at least 10% of assets in gold....always for unforeseen crises. I think that is prudent nowadays. This 10% is a minimum until we see what the monetary base/M1 money supply do next month. The monetary base had a huge jump this month giving a hint of future inflation. At some point the Fed MUST inflate. Government spending had gone nuts even BEFORE the housing price decline. The continuing decline at least until late 2009 underpins WAY too many overleveraged debt instruments held by banks that we are not even thinking about yet....but we will! The presumption now is that M1 inflation will kick in after next year. Then gold will be a great buy, but if they are inflating the base now (at it sure looks like they just might be), THEN one might want to hold a LOT more than 10% of assets in gold. Gold is GREAT to hold in economic crises (like we are in now) and in war. War with Iran is possible, not likely if we are sane, but if we go to war and we will then get $400+ oil, then one would be very happy to be holding gold. VERY happy.
So own some gold now....and buy a LOT more if it goes lower. It will go back up, the question is when. Just keep an eye on the warmongers, Bush/Cheney/McCain and the spend us into oblivion guy, Obama. The M1/monetary base and declining housing prices will dictate the timing...or a war or something other crisis. Everthing is kind of brittle and jittery and skittish right now. Just my opinion. Take it for what it is worth.

Get Out of Commodities - Barron's

Jersey:
"This is absolute insanity.......Half of the the "experts" are screaming to get out of commodities as quickly as you can while the other half is screaming to get into commodities as quickly as you can."

And you know what is really scary. Both halves are LIKELY correct. I too am bewildered.

Just hang on to your job and to your gold. You may not get rich but you will eat and you will NOT go broke. You could get rich. Maybe not. But at least you will not be broke.

Maybe have BOTH gold and have cash FDIC insured. I have a friend who just bought a 4 year CD at 5% interest. He may be nuts but who knows, maybe I am to think that he is.

This is just a wild time right now. Who knows what the Plunge Protection Team is going to do? You tell me how to plan for NEW regulations, an unknown President in January, both inflation & deflation at the SAME time, and a creative Fed Reserve Chair who likes to print lots of money but does not seem to affect inflation or the M1 money supply. Something is whacky. Are the formulas fudged? It is all very wild and crazy AND unpredictable.

A war in Iran would provide a lot of excuses for a lot of people right now AND make many folks even richer. Hang on it is going to get exciting. You ain't seen nuthin yet.