MGA_1

Gold: How the Mainstream Gets It So Wrong

This is an equities bear market and commodities (including gold) bull market. I think this will eventually reverse once all the bad debt has been squeezed out, but for now... i'm betting on gold.

Why a Gold Bug Isn't Buying Gold Now

Hmm... more short term based building then a rally down the line - seems reasonable. I just can't fathom something terrible is not going to happening with a broke US public and 1.4 trillion dollar govt deficits. Who's gonna pay for all this?

Inflation or Deflation: Which Will Win?

Well first off, inflation is an expansion in money and credit. Deflation is a contraction in money and credit. During heavy inflationary times people can lose faith in the currency, raid their bank accounts and greatly increase the money in circulation thereby increasing consumer prices.

There are only two ways of clearing out excess debt/credit - deflation or inflation. We were on a deflationary path until the govt/fed stepped in. I pick significant inflation until the govt gives up and we have heavy deflation.

Four Keys to Gold’s Next Move

Certainly interesting times for the yellow metal. Has there been a campaign to artificially suppress the price? Are the central banks out of gold? It's possible that the yellow metal will go down with the stock market in the future, but one thing I'm pretty certain of - there are more claims against the metal than actual supply. We may see some very interesting and unexpected activity with both Comex & GLD soon.

The Five Worst Bailouts

You know, by bailing out these huge institutions, aren't we just kicking the can down the street? How is all the bad debt eventually going to written down? Time to let some of the big companies fail and let others take over the assets.

Morgan Stanley Sees V-Shaped Recovery: I See W-Shaped Recession

Oh... just wait until Fall & Winter... especially winter. The US is broke and needs to learn how to save and manufacture again.

Speaking of Gold...

We WERE on a deflationary downtrend the later part of '08... then the fed stepped in with TARP, asset purchases, long bond purchases, etc. I don't think the govt has the stomach for a deflationary crash so I think they're gonna print and continue to print...

Fool's Gold (Part 2)

I think I disagree with some of the assumption in this article:
* I don't agree with the premise that gold doesn't track well with inflation/deflation. It did terrific in the 70's and crashed in value in Japan's deflation in the 90's. It's also done quite well this decade. I wouldn't take the 1930's as an example because the US was on the gold standard, but it actually appreciated midway through the decade.
* The underpinnings of inflation/deflation are monetary. If the govt prints money or it's supports easy credit (the fed) then you may have an inflationary boom which we seem to have had in the last decade. Gold has gone up 4x in the past decade... not bad for an investment.
* I don't see hyperinflation as guaranteed, but also not impossible. I wouldn't doubt if we see a doubling or tripling of commodity prices in the next couple years with current monetary policy. If the govt continues to try and "save the day", then yes, I definitely expect to see serious inflation. Remember, we are no longer on the gold standard and unemployment will continue to go up.
* If you want to *trade* gold, that's fine, but then why not other commodities or equities? If you traded the right stocks over the past year you would have made a tremendous amount of money with market volatility. If you have special insights into gold's up and down's then that's terrific.

We looked like we were going into a pretty serious deflationary downturn starting last fall/winter. Everything crashed, including gold. The govt stepped in with bailouts left and right attempting to stabalize/reinflate the system. What was it, $800 billion in fannie/freddie bond purchases - $300 billion in long T Bills purchased in March? I think this govt is willing to try and spend it way out of this...

Are Gold and Silver Ready for Their Next Substantial Leg Up?

I think we're in a commodities bull market that still has a ways to play out. The US monetary policy is insane and I can't imagine it won't help the yellow metal long term. At this point, it's not whether I go long stocks or gold, but rather do I stay in cash or hedge against inflation...

This Recession Isn't Over: Now for the Hard Part

Sorry, but I think we're actually about 1/3 or 1/4 the way through this thing. The problem is still *debt*. Tons of it. Credit card, Alt-A/Option Arms and then commercial real estate. Then our govt.

I don't think comparing us with 90's Japan is a good comparison - I would actually say we are more like 2000 Argentina. A lot of external debt (china/japan). Huge public sector programs and budget deficits and I think the govt is going to try and save the day through monetary policy. I'm looking for a continued inflationary downturn.

Deflation vs. Inflation: The Great Debate Rages On

Hmm... deflation *should* be taking hold, but the fed sure it moving a lot of money into the economy. The thing I'm really looking for is if (and most likely when), the fed starts purchasing treasuries directly. If things really start looking bad again and interest rates start creeping up, I wouldn't be surprised if the fed wades on in to the t bill market...

In Economic No Man's Land

If you track unemployement like they used to, the numbers are far worse - 16%. I wouldn't be surprised if the US hits 25% or more within a couple years. The gigantic credit bubble has popped....

California's Default Is Certain

Wait, I'm sorry, did you say "California" or the "United States"?

The Black Swan of Savings in the U.S.

I'm sorry, I needed to add one more thing: reduce taxes and get the govt out of the way.

There was heavy govt intervention in the 1930's by FDR. Program after program after program, heavy taxes (top tax rates of 90%), and intervention into business They depression lasted 10 years - govt intervention didn't help at all. In the depression of 1920, the government budget was reduced and taxes lowered. It lasted 1 1/2 years.

To mean it seems insane to ask already broke people to take on more debt and spend even more - when does it end? How are they going to pay off their mortgages and credit cards? Aren't the lenders going to eventually ask to be repayed? Do you want the rest of us who've saved into debt to save the economy? What happens when we are supposed to repay our debt? What are the lenders going to do?

And sorry... just one more thing - the govt needs to default on our debt so we can start again with a clean slate. I think it's going to happen in a couple years anyway.

The Black Swan of Savings in the U.S.

Japan had a gigantic real estate/stock market bubble that crashed. The govt went on a spending spree that did absolutely no good and probably should have let things crash down then they could have started anew.

The savings rate went *negative* for the US in '06. Are we trying to consume our way back to those good times?

There is no way to avoid the downturn - it's just gonna happen. The groundwork for longterm prosperity are:
* Let people begin to save again - this is capital that can be borrowed to rebuilt industry
* Start running balanced budgets both federal and local
* Put the dollar on a gold backing so the govt can't inflate away problems or try and inflate to prosperity.
* Let the system find its natural equilibrium (w/o govt intervention).

In the mean time, the system has to crash down to clear out all the bad debt, then we can start again.

Just an FYI - there are some excellent books out there, but it's most interesting that there was a deep depression in 1920 that was initially worse than the great depression. What did the govt do... nothing. After a year and a half, things cleared out and we were off to the races again. I think if this depression were allowed to run it's course naturally it would be worse than the first part of the great depression, but the debt would be cleared out and we could being the process of rebuilding manufacturing once again in the US.

www.youtube.com/watch?...


On Jun 27 11:39 AM Alex Filonov wrote:

> And what exactly this medicine is going to save us from? By the way,
> Japan has the highest savings rate among developed countries, so
> Japanese economy should be in excellent shape, right?