Andy1234

Five Charts to Rule Them All: Bullish Commodity Trends Continue

you do realize that the option arm Alt-A resets are just starting to ramp up. they should peak in late 2011.......

What's Wrong with Market Speculation?

Well.....what fuels demand? what sets the price of oil and other commodities?

The amount of money in circulation......

How is the money controlled in circulation? By loans and the federal reserve.


Isn't it possible.....that speculators are only chasing prices...not setting them?

If speculation was in fact causing the prices...wouldn't there be a disconnect between delivery prices and spot prices? there is no such thing.

And the market is forward looking......with all the projects coming offline......I think people are seeing the problem.....future supply will decrease....current inventories are high (because of the recent run up in oil prices in 2008). They are looking ahead and saying....there is going to be a large problem.....we need prices higher to spur growth in oil supply.

If oil prices are low today....the future oil supply will be less....as todays oil prices increase....future oil supply will be greater. Its a double edged sword....where the market is right and wrong 100% of the time...and is why the price moves so rapidly to adjust.....

The Rise of Inflation Premiums

I personally don't think the fed can raise interest rates because of multiple reasons.

1) The interest on their short term interest rates would be HUGE...this would lead to massive money printing just to cover the interest on the debt.
2) House prices would tank yet again....as interest rates would need to rise in order for the velocity of money to be slowed down and saved.
3) The two above would slow growth of the economy or kill the economy......I don't know how the fed can balance a bubble forever.


We currently have malinvestment everywhere.....at some point these malinvestment need to be cleaned.....and the way the government is choosing technologies to invest in, and what not to invest in, and the rules/regulations they set through policy will create massive distortions....once that low interest rates will not be able to resolve.

What we need to do is deregulate in real terms. Remove all regulations and let companies fail who are incompetant.....that ultimately is the regulation...being able to survive. Remove all government scholarships, grants, etc. Remove regulation and paperwork on the health care side etc. We should see prices come down dramitically. Prices still continue to drop with operations that are selective....like lasic eye surgery and cosmetic surgery.

Central planning does not work.....we need the free market to do it. And we need to slowly get ourselves away from government. Just MO.



On Aug 27 08:28 PM JeffDB wrote:

> On Aug 27 05:40 PM Erwan Mahe wrote:

The Rise of Inflation Premiums

Inflation is just the increase in money supply.

If the economy is contracting in output....and the same amount of money is in the system....the result is further inflation as GDP has contracted.


The best analogy I have heard for inflation goes something like this.


Glass = size of the economy
Water = money in that economy


Let's say you take a snapshot of the economy and at that time the economy is a glass. The glass is half full of water (money).

Now.....let's determine ways to create inflation in this economy.

In order for inflation to be created...only TWO possible things can occur to result in inflation.

1) Water is added to the cup.
2) The size of the glass shrinks.

Vice versa for deflation.
1) Water is taken away from the cup.
2) The size of the glass gets larger.


I think whats happening now....is the government is injecting crap loads of money into banks.....but the money is not being loaned out....and people are paying the debts down....decreasing the real money supply in circulation.


as a result......prices need to come down for the market to clear.

You can also tilt the glass and have money flow from one sector to another....but jobs will be shifted from one sector to another if the shift is large enough. It will not result in higher inflation across the board....because the money supply (water) remained the same.

A lot of people say Higher oil prices create inflation. It does not create inflaton....it simply is a result of money printing....or demand/supply issues. It cannot create inflation. If you think it can....please explain to me...how it can.

Inflation Ahead

If the market goes to crash again.....I think more and more stimulous will result......

The Dollar Must Decline for the Market to Rise

a devalued dollar also favors those who hold a large amount of debt. I just purchased a condo with the first time homebuyers $8K.....and for the first time am in debt. I have a feeling inflation will run strong....I have lots of investments in reits (canada) and oil companies that pay dividends, with smaller speculative (but earning money) oil, NG, gold stocks. I will continue to play it this way. I am just debating if I should buy another condo, or buy a nice car...or something....as my investments will continue to increase....and my dividends continue to get larger.

Commodities' Best Month Since 1974 - Is This Supposed to Be Good News?

Not only is inflating the dollar lead to inflation.......but a shrinking economy also leads to inflation. And I hate to say it.....government is actually creating more inflation with most of the jobs they think they are creating. They are actually increasing deficits or rather creating non-value added jobs to society through government jobs.

Name something that the government actually produces that people want? or what services does the government export?

So the overall trend is expansion of the money supply at the government level...which will eventually lead to a larger base of money to expand the money supply through bank loans ON TOP of decreasing economic productivity.

Talk about inflation.

Which Asset Classes Are the Best Inflation Hedges?

I agree with the above comment. We need to overhaul the government....completely shrink the size of it....and increase the private sector.

If you understand inflation...you understand that one factor of inflation is government size, taxes, money supply growth, interest tied to the issuance of money, etc.

We need to educate people in America about our government...and the role they shouldn't be playing. As government increases in size....they either tax americans through higher taxes, or thru printing of money. It also shrinks the size of the private sector....and I can't think of one government job that actually increases productivity. So you shrink the size of the economy...print money......which all leads to inflation. With Obama doing what he is.....I wouldn't be surprised to see our currency have a drastic fall out. He is pushing to close tax loop holes....pushing for higher taxes on the wealthy and corporations....having people who can pay, pay more....and issuing tons of money....this will all lead to rediculously higher inflation at some point in the future. The only thing saving us right now from inflation is the total destruction of credit....which needs to happen. But if you fill the system with a ton of money....and its just not being loaned out today...eventually it will...and thats the beginning of the crisis...that along with our government deficits....which we will be printing in overdrive just to manage the interest on those debts.

I like commodities, REITS (foriegn, Canada), and metals.

The materials never go out of style....neither does land.....and we need them regardless of money to survive. I would also look into utilities that deal with electricty and water worldwide. I also think seed technology for agriculture will do very well. Boring businesses that people need will win in the end.

How to Value a Commodity

I liked this article a lot......I like the inflation adjusted chart......it would be nice to see one of oil.

If Bear Market Rally Unfolds, Diversify Risk

I am not sure how to view the deflation/inflation argument for the short term.

Most of the money created to get inflation is lending by the banks.....and money being pulled from home equity....and house prices increasing.......which opens up more lending...etc.

I just don't see house prices increasing anytime soon....in fact....I see more declines ahead (Alt-A and option ARM resets)......so I understand the government is printing money like crazy.....but the banks are lending. And the only way that money gets to the public is through loans....correct? So if they aren't loaning....the money just sits there. I am split on the deflation/inflation call on the short term.....definitely have inflation long term.

Credit Crunch: How Do We Fix the Solution ?

With all the foreclosures and the banks finally lending to those who really should deserve the money....and being tougher on those who do not deserve the money.......we should expect deflation (decrease in money supply) although reserves will continue to increase correct?

As these foreclosures are coming back to the banks....valued at a lot less money than before. This was the biggest artificial boom ever.

Now the banks lend money that doesn't really exist......by expanding the money supply....now that the homes are coming back into their books......and the loan defaults....wouldn't that be a contraction in the money supply?

I still have a difficult time understanding our fractional reserve banking system....it just doesn't make any sense at all. How can either the government or banks just expand the money supply because their is a demand for either more money...or for a loan. This will automatically zap value from all other money out there. What the hell?

If the banks continue to be tighter with who they lend to, wouldn't we naturally have falling homes prices and deflation because of defaulted loans......prices would need to come back far enough to where good honest people who have savings can afford homes to buy.....or investors can rent and get a return.

In the end.....our government has turned every saver into a speculator. As any person who wants to maintain their purchasing power + increase in standard of living by gaining purchasing power over inflation requires one to speculate because of inflation. Long term inflation, short term deflation.

The Outlook for Corn

Its not speculators who are handling these markets.

Its government policies and the ability to access money at low interest rates.

The root of almost every "free market" problem lies in policies or money supply.

With a currency that has depreciated over 96% since 1913 or the year the fed reserve came into existance.....whenever you have a group controlling a money supply backed by nothing....everyone becomes a speculator just to maintain the purchasing power that you have saved.

The problem is government and their policies....and the fed reserve.

Jim Rogers Still Bullish on Commodities, Bearish on the Fed

He, like Peter Schiff, have correctly called a lot of things happening in the market....and I think they will repeatidly do so in the future.

They have sound reasoning.....and while sound reasoning may work great for long term investors....the market can act irrational in the short term. There are also small side effects that are tough to predict along the way...but their reasoning is correct for the long term.

Jim Rogers had run the Quantum fund and returned thousands of percents over a 10 or 20 yr period.....WIKI his name and it explains how well he performed in the past.

Looking forward....I believe we will hit resource constraints of some kind....food, material, energy, or clean water. I am not sure which one it will be.....and this agrees with the predictions of the club of rome. But as production continues higher for many of these materials.....the decline rates also become greater.

Its like trying to accelerate a thing with mass to the speed of light....as it gets faster and faster....and approaches the speed of light.....its energy input becomes infinite....just like production of many materials. Substitutes may or may not work......

Is Oil a Bubble? Part One

Thats true....but America has declining NG production already.

He wants to remove NG from producing electricity...and add that to transport....thats where we get the gain.

he is a proponent of wind....and I agree with him. What he says makes SENSE.

these other people are spewing information without reading too much into the problem on the supply side.

this is a supply side driven problem....and soon supply will start to dwindle and fall off the cliff.

I really cannot relate to economists.....as they think prices and money will cure problems.....yet the phsycists and geologists are saying otherwise.

I am sure we will probably land somewhere in the middle. But one thing to keep in mind.....to produce the same amount of oil in the quantities we are using.......the numbers are something like 15 billion for 500K barrels. if we need 80MBPD NEW oil by 2030......thats 2.4 trillion bucks in investment....and the sad part is.....thats probably a conservative estimate. Now this doesn't take into account the increased energy costs for the infastructure.....prob... using water from the ocean, etc....which would probably be safe to say that the cost would be closer to 10 trillion dollars. Yes.....a factor over triple what I just estimated.

Look at some of the new projects....and how their costs keep tripling in price.

Is Oil a Bubble? Part One

Some studies show that Uranium will peak in 2030 at CURRENT rates.

that could very well be pulled in a bit when everyone does a mad dash to nuclear. I have read that Thorium may also be used.....and that Uranium can be recycled a few times......but even so.....we are mainly living off the inventory of Uranium right now....we are supposed to be in production shortfalls by 2013-2015 from the studies that have been studied.

take a look at Cameco's website....they have a couple of studies...as does a few others....even google and search around for a day. its pretty interesting stuff.