Gold broke through $700/oz.
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From: near Magnolia, Tx.
Wow ... the 1 oz gold coin my dad gave me when I graduated highschool is worth something (other than just being a cool gift from my ol' man) again !!
Anybody watch the show Gold Fever on the weekends ? Kinda gets you into the mood to go prospectin' ... especially since the payoff is pretty good these days.
My ol' man was a mining engineer and he had us in the creek on our mining claims in Montana when I was barely old enough to walk. I still have a little of his old gold dust packed up somewhere
.
PISTOL
Anybody watch the show Gold Fever on the weekends ? Kinda gets you into the mood to go prospectin' ... especially since the payoff is pretty good these days.
My ol' man was a mining engineer and he had us in the creek on our mining claims in Montana when I was barely old enough to walk. I still have a little of his old gold dust packed up somewhere
.PISTOL
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Gold at $700 is just a sign that foreign investors are losing faith in our currency. The TIPS spread is now 2.5%. Bernanke has to increase interest rates more to get people thinking he has things under control.
What I want to know is what is going to happen with the housing bubble. Are we going to go into recession because of it ? How many people out there have ARMs and do they have enough cash flow to cover their mortgages at the ever increasing interest rates ?
What I want to know is what is going to happen with the housing bubble. Are we going to go into recession because of it ? How many people out there have ARMs and do they have enough cash flow to cover their mortgages at the ever increasing interest rates ?
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From: Commerce, OK
As I'm sure you know, Silver closed at $14.21/oz on Friday. Gold closed at $710.50 after surging as high as $730.00.
But if you weally want, I'll be glad to give you $50 for your 2# of silver.
Edwin
But if you weally want, I'll be glad to give you $50 for your 2# of silver.
Edwin
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From: Commerce, OK
Originally Posted by mouseguy
Gold at $700 is just a sign that foreign investors are losing faith in our currency. The TIPS spread is now 2.5%. Bernanke has to increase interest rates more to get people thinking he has things under control.
What I want to know is what is going to happen with the housing bubble. Are we going to go into recession because of it ? How many people out there have ARMs and do they have enough cash flow to cover their mortgages at the ever increasing interest rates ?
What I want to know is what is going to happen with the housing bubble. Are we going to go into recession because of it ? How many people out there have ARMs and do they have enough cash flow to cover their mortgages at the ever increasing interest rates ?
The fed has no choice but to raise rates because it is getting harder to sell our bonds to foreign investors to keep the deficit spending ball rolling. It is like pushing a big rock up a snowy hill however and eventually we'll be unable to push it any further and to tired to simply hold it. It will roll back over us and gather snow on it's way back down and destroy whatever is in it's path.
People with ARM's will be hurt first by higher interest rates because their payments will go up in a declining market. But the reason prices on real estate have gone up is because the lower interest rates and the lenders being awash in cash has made it much easier for people to qualify for loans. This increases demand of housing and as more people pile on the demand goes even higher. Howeve the opposite is true, when interest rates go up, less cash is available and fewer people can get loans. The people who wanted new houses or are speculators have already bought and have maxed out their limit of how much they can borrow. This means fewer buyers which lowers demand. Demand is already slacking off and many newly built units still stand unsold. There is a housing glut in many places.
If you have an ARM my advise is to refinance immediately at a fixed rate. If you are a speculator, NOW is the time to sell while you still can. The housing boom was over as soon as rates started back up. It's takes this long for things to start cooling off.
Other things are cooling off as well. Foreign imports will start going up in price and inflation is going to hurt many people on fixed incomes. Uncle sugar will of course respond with more subsidies and more deficit spending but eventually that rock will get to heavy to push up the hill.
Edwin
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From: Cummins Technical Center, IN
Originally Posted by edwinsmith
A recession is sure to happen soon and if spending/borrowing isn't curbed and reversed soon a depression is possible.
The fed has no choice but to raise rates because it is getting harder to sell our bonds to foreign investors to keep the deficit spending ball rolling. It is like pushing a big rock up a snowy hill however and eventually we'll be unable to push it any further and to tired to simply hold it. It will roll back over us and gather snow on it's way back down and destroy whatever is in it's path.
People with ARM's will be hurt first by higher interest rates because their payments will go up in a declining market. But the reason prices on real estate have gone up is because the lower interest rates and the lenders being awash in cash has made it much easier for people to qualify for loans. This increases demand of housing and as more people pile on the demand goes even higher. Howeve the opposite is true, when interest rates go up, less cash is available and fewer people can get loans. The people who wanted new houses or are speculators have already bought and have maxed out their limit of how much they can borrow. This means fewer buyers which lowers demand. Demand is already slacking off and many newly built units still stand unsold. There is a housing glut in many places.
If you have an ARM my advise is to refinance immediately at a fixed rate. If you are a speculator, NOW is the time to sell while you still can. The housing boom was over as soon as rates started back up. It's takes this long for things to start cooling off.
Other things are cooling off as well. Foreign imports will start going up in price and inflation is going to hurt many people on fixed incomes. Uncle sugar will of course respond with more subsidies and more deficit spending but eventually that rock will get to heavy to push up the hill.
Edwin
The fed has no choice but to raise rates because it is getting harder to sell our bonds to foreign investors to keep the deficit spending ball rolling. It is like pushing a big rock up a snowy hill however and eventually we'll be unable to push it any further and to tired to simply hold it. It will roll back over us and gather snow on it's way back down and destroy whatever is in it's path.
People with ARM's will be hurt first by higher interest rates because their payments will go up in a declining market. But the reason prices on real estate have gone up is because the lower interest rates and the lenders being awash in cash has made it much easier for people to qualify for loans. This increases demand of housing and as more people pile on the demand goes even higher. Howeve the opposite is true, when interest rates go up, less cash is available and fewer people can get loans. The people who wanted new houses or are speculators have already bought and have maxed out their limit of how much they can borrow. This means fewer buyers which lowers demand. Demand is already slacking off and many newly built units still stand unsold. There is a housing glut in many places.
If you have an ARM my advise is to refinance immediately at a fixed rate. If you are a speculator, NOW is the time to sell while you still can. The housing boom was over as soon as rates started back up. It's takes this long for things to start cooling off.
Other things are cooling off as well. Foreign imports will start going up in price and inflation is going to hurt many people on fixed incomes. Uncle sugar will of course respond with more subsidies and more deficit spending but eventually that rock will get to heavy to push up the hill.
Edwin
Our "oily" politicians didn't learn the lessons of the 60s and 70s, and now we're going to have to go through a VERY painful time (just like the 70s) just to get on our feet again.
When mortgage rates are hitting 15% and higher, people will barely remember what it was like to have gas for "only" $3 a gallon.
THERE IS NO FREE LUNCH!! EVER EVER EVER!
The current monetary policy of this country has built our economy into a very large house of cards. It, unfortunately, will come tumbling down.
Sadly, only THEN will people realize that PAPER WEALTH WILL NOT REPAY REAL DEBT!
justin
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From: Cummins Technical Center, IN
Originally Posted by rockwithjason
A fool pays the price, but doesn't count the cost. Our economic prosperity was built on a lie. Massive amounts of credit were extended to people and companies that were and are pattently unqualified to have it. And just what were the goals of the fed? To pump up the economy for political purposes? Hmmmm I wonder. A house built on sand will surely fall. An economy can only have as much true credit as the value of it's savings. With a negative savings rate, that automatically tells you that the current prosperity is mortgaged to the hilt. The OPEC nations have already kicked around the idea of forcing the US to pay in gold instead of dollars to aviod having the value of payment inflated away. In other words, no more real goods for worthless dollars. We went from being the world's largest creditor nation to being the worlds largest debtor nation, and sooner or later the payment will come due. Our elected leaders put this into motion to finance their pet projects like welfare and other social programs in order to buy votes. Choices were made to pass legislation that eventually destroyed our industrial base and now we see the consequences of that, job flight overseas.
Excellently said.
Does anyone remember the Japanese meltdown?? They did the SAME THING-- overextended on credit (mostly due to nepotism and such though), and their economy crashed when they had to pay the piper.
I ask this: WHO WILL RESCUE THE US? The IMF? Let's pretend....
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From: Commerce, OK
Gold dropped down below $700 today when the London market opened. This is the usual way that the central banks do. They dump a big chunk of gold to drive the price down again but the overall trend is gold is in a bull market. The guys at GATA believe the central bankers have what is called a $6 rule. When the price of gold goes up $6 they start selling to drive it back down.
The central bankers are getting desperate to continue the illusion that paper money is still good even though they are inflating it. They inflate paper money of course because that's how they get rich. The governments don't have to raise taxes or they can actually lower taxes while continuing to increase spending.
The problem is, ALL major currencies are FIAT money systems and they all try to maintain equilibrium with the dollar because it is the defacto reserve currency.
But what happens to our economy when the dollar is inflated to a point where other central banks want to hold it as reserves? China and Japan are already divesting their dollar holdings. They don't want to do it to fast because they will sustain huge paper losses if the dollar declines to quickly.
I guess what I'm saying is that ALL major currencies are in the same boat because of deficit spending. We are in the worst shape and our economy will probably suffer the most but the problems are worldwide and eventually the debts will either be paid or defaulted on. I'm betting that the US will default eventually or it will try to inflate it's way out of debt. We could very well see Hyper-inflation of pre-WWII Germany style.
Our politicians and economists are such believers in the fiat money system they think that deficits don't matter. The so-called inflation control the Fed keeps bragging about is their way of making a solid 2-3% on every dollar the government borrows. But inflation is completely a characteristic of fiat money systems. So-called price inflation is a result of an inflation in the supply of money. Because it typically takes about 18 months for a spike in the money supply to be felt as increased prices, the central banks profit from the inflation first then to a lesser and lesser extent do receivers down the line. BTW the official CPI which is the published measure of inflation is made up from a basket of commodities and other prices. The CPI doesn't include such items as food and energy! Imagine that!
Gold on the other hand, can't be inflated. It must be dug up or otherwise reclaimed from previous uses. Virtually every ounce of gold ever mined throughout all of human history still exists. Silver OTOH is much more of an industrial metal and it is cureently being consumed at a rate that is greater than what is being produced.
There has historically been a ratio between the price of gold and silver of about 16:1 meaning it took 16 oz. of silver to buy an ounce of gold. Currently the ratio is about 52:1. This means either gold is overpriced or silver is underpriced. My guess it is both but my bet is that gold is only a little overpriced while silver is WAY underpriced.
The low price of silver could be due to the fact that more people are using digital cameras and so film is in a bear market. A lot of silver is used to make the emulsion on both the negative and the print paper, neither of which is necessary for a digital photograph. However I don't have any source for figures on how much silver is not being used to make film so that idea is pure speculation. But the fact still remains that silver is still being consumed at a greater rate than it is being produced.
Because gold is the traditional safe-haven money during inflationary times, and also because it is much more portable than the equivalent amount in silver, people worldwide tend to buy more gold than silver which is probably why gold is so much more expensive than silver. Silver OTOH has the potential to rise at some point at a greater rate until the historical ratio of 16:1 is re-established. I'm buying more silver than gold right now. There are people who make money by trading gold against silver as the market fluctuates. When the ratio is as it is now they sell gold and buy silver. When the ratio goes the other way the sell silver and buy gold.
If we see hyperinflation again then gold/silver will be in much greater demand for use as money. Because silver is in such short supply it most likely will become much more valuable than it is now.
Want to see gold skyrocket? If Bush attacks Iran the price of oil and gold will shoot up like a Tomahawk missle. Silver will probably follow. The people of India have always held gold and when a girl is married her dowery is in gold. But people in the US have been so thoroughly dis-educated about gold they think of it as the "barbarous relic." They have been told that the fed keeps inflation in check by regulationg interest rates and the supply of paper money. But does anyone ever stop to think that if we were on a true gold standard that there would be virtually NO inflation at all?
Think of it. Gas would cost 10 cents a gallon. We would use gold and silver coins for buying things. (Up until 1965 our coins in our pocket were real silver. People born after that have no idea that a real money system isn't such an ancient concept. Does anyone remember Silver Certificates? DO these post 1965 babies know that gold and silver coins are the only constitutionally lawful money of the united states?) We would in all likely hood have paper money but that paper money could be exchanged for lawful gold or silver money at any bank anywhere. If that bank were to ever refuse to exchange gold/silver for its paper that people would immediately become suspicious of that bank and they would lose depositors. In this way, everyone would be kept honest.
Of course there will be price fluctuations. If somebody made a huge gold strike there would be an inflation in the supply of gold. By the same token if there was a bad year for wheat the cost of bread would go up. Prices would increase in both cases but not as much as they do in a fiat money system simply because the supply of gold and silver already in existence is so huge to begin with and it would take such a vast amount of NEW gold to make the difference felt. Also gold miners don't want the price of gold to go down so they tend to hold it in reserve and only sell slowly to keep prices stable.
The markets have also developed a marvelous system for stabilizing the price of commodities. It is called the futures market. Farmers and speculators use it all the time. Grains are sold "forward" at an agreed to price for delivery at a later date. This way a farmer knows what he will get for his wheat and the buyer knows what it is going to cost him. This system was put in place expressly to smooth out price fluctuations which could ruin farmers if they suddenly had a bumper crop and prices were driven down. Also seasonal prices are stabilized so the prices at harvest time don't decline as much as they would nor do prices rise as much during droughts.
There is a futures market for gold/silver and every other industrial metal in which companies need to have a clear indication of what their supplies will cost them. The idea that the fed stabilizes prices or "controls" inflation is just plain silly. It is the fed which PRODUCES monetary inflation in the first place. Did anyone notice that the fed no longer publishes the M-3 monetary numbers? This was the only gauge by which people could know how much the supply of money was being inflated. The feds goal is to inflate the supply of money to make their theft scheme work. They wish to keep their machinations as secret as possible in order to maintain confidence in the worldwide Ponzi scheme while they're stealing the bread right from the mouths of our kids.
Edwin
The central bankers are getting desperate to continue the illusion that paper money is still good even though they are inflating it. They inflate paper money of course because that's how they get rich. The governments don't have to raise taxes or they can actually lower taxes while continuing to increase spending.
The problem is, ALL major currencies are FIAT money systems and they all try to maintain equilibrium with the dollar because it is the defacto reserve currency.
But what happens to our economy when the dollar is inflated to a point where other central banks want to hold it as reserves? China and Japan are already divesting their dollar holdings. They don't want to do it to fast because they will sustain huge paper losses if the dollar declines to quickly.
I guess what I'm saying is that ALL major currencies are in the same boat because of deficit spending. We are in the worst shape and our economy will probably suffer the most but the problems are worldwide and eventually the debts will either be paid or defaulted on. I'm betting that the US will default eventually or it will try to inflate it's way out of debt. We could very well see Hyper-inflation of pre-WWII Germany style.
Our politicians and economists are such believers in the fiat money system they think that deficits don't matter. The so-called inflation control the Fed keeps bragging about is their way of making a solid 2-3% on every dollar the government borrows. But inflation is completely a characteristic of fiat money systems. So-called price inflation is a result of an inflation in the supply of money. Because it typically takes about 18 months for a spike in the money supply to be felt as increased prices, the central banks profit from the inflation first then to a lesser and lesser extent do receivers down the line. BTW the official CPI which is the published measure of inflation is made up from a basket of commodities and other prices. The CPI doesn't include such items as food and energy! Imagine that!
Gold on the other hand, can't be inflated. It must be dug up or otherwise reclaimed from previous uses. Virtually every ounce of gold ever mined throughout all of human history still exists. Silver OTOH is much more of an industrial metal and it is cureently being consumed at a rate that is greater than what is being produced.
There has historically been a ratio between the price of gold and silver of about 16:1 meaning it took 16 oz. of silver to buy an ounce of gold. Currently the ratio is about 52:1. This means either gold is overpriced or silver is underpriced. My guess it is both but my bet is that gold is only a little overpriced while silver is WAY underpriced.
The low price of silver could be due to the fact that more people are using digital cameras and so film is in a bear market. A lot of silver is used to make the emulsion on both the negative and the print paper, neither of which is necessary for a digital photograph. However I don't have any source for figures on how much silver is not being used to make film so that idea is pure speculation. But the fact still remains that silver is still being consumed at a greater rate than it is being produced.
Because gold is the traditional safe-haven money during inflationary times, and also because it is much more portable than the equivalent amount in silver, people worldwide tend to buy more gold than silver which is probably why gold is so much more expensive than silver. Silver OTOH has the potential to rise at some point at a greater rate until the historical ratio of 16:1 is re-established. I'm buying more silver than gold right now. There are people who make money by trading gold against silver as the market fluctuates. When the ratio is as it is now they sell gold and buy silver. When the ratio goes the other way the sell silver and buy gold.
If we see hyperinflation again then gold/silver will be in much greater demand for use as money. Because silver is in such short supply it most likely will become much more valuable than it is now.
Want to see gold skyrocket? If Bush attacks Iran the price of oil and gold will shoot up like a Tomahawk missle. Silver will probably follow. The people of India have always held gold and when a girl is married her dowery is in gold. But people in the US have been so thoroughly dis-educated about gold they think of it as the "barbarous relic." They have been told that the fed keeps inflation in check by regulationg interest rates and the supply of paper money. But does anyone ever stop to think that if we were on a true gold standard that there would be virtually NO inflation at all?
Think of it. Gas would cost 10 cents a gallon. We would use gold and silver coins for buying things. (Up until 1965 our coins in our pocket were real silver. People born after that have no idea that a real money system isn't such an ancient concept. Does anyone remember Silver Certificates? DO these post 1965 babies know that gold and silver coins are the only constitutionally lawful money of the united states?) We would in all likely hood have paper money but that paper money could be exchanged for lawful gold or silver money at any bank anywhere. If that bank were to ever refuse to exchange gold/silver for its paper that people would immediately become suspicious of that bank and they would lose depositors. In this way, everyone would be kept honest.
Of course there will be price fluctuations. If somebody made a huge gold strike there would be an inflation in the supply of gold. By the same token if there was a bad year for wheat the cost of bread would go up. Prices would increase in both cases but not as much as they do in a fiat money system simply because the supply of gold and silver already in existence is so huge to begin with and it would take such a vast amount of NEW gold to make the difference felt. Also gold miners don't want the price of gold to go down so they tend to hold it in reserve and only sell slowly to keep prices stable.
The markets have also developed a marvelous system for stabilizing the price of commodities. It is called the futures market. Farmers and speculators use it all the time. Grains are sold "forward" at an agreed to price for delivery at a later date. This way a farmer knows what he will get for his wheat and the buyer knows what it is going to cost him. This system was put in place expressly to smooth out price fluctuations which could ruin farmers if they suddenly had a bumper crop and prices were driven down. Also seasonal prices are stabilized so the prices at harvest time don't decline as much as they would nor do prices rise as much during droughts.
There is a futures market for gold/silver and every other industrial metal in which companies need to have a clear indication of what their supplies will cost them. The idea that the fed stabilizes prices or "controls" inflation is just plain silly. It is the fed which PRODUCES monetary inflation in the first place. Did anyone notice that the fed no longer publishes the M-3 monetary numbers? This was the only gauge by which people could know how much the supply of money was being inflated. The feds goal is to inflate the supply of money to make their theft scheme work. They wish to keep their machinations as secret as possible in order to maintain confidence in the worldwide Ponzi scheme while they're stealing the bread right from the mouths of our kids.
Edwin
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From: New Orleans, LA
All of this economic/historical stuff is way over my head, but I wanted to throw in my 2 cents (or is it ounces, whatever...).
I bought an engagment ring today. Been seeing this thread but never read it. After shopping for a while and finally making up my mind, I went to purchase the ring. As the lady was ringing it up, she says, "Oh, I don't think this is the up to date price" As she says this, the title of this thread pops in my head and I can feel the hole burning in my wallet. Let's just say the price for the gold portion of the ring nearly doubled!
I should quit going to school for engineering and become a jeweler.
Oh well, she's worth it.
I bought an engagment ring today. Been seeing this thread but never read it. After shopping for a while and finally making up my mind, I went to purchase the ring. As the lady was ringing it up, she says, "Oh, I don't think this is the up to date price" As she says this, the title of this thread pops in my head and I can feel the hole burning in my wallet. Let's just say the price for the gold portion of the ring nearly doubled!
I should quit going to school for engineering and become a jeweler.
Oh well, she's worth it.
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From: Commerce, OK
Originally Posted by HOHN
Edwin--
Is the Global Economy a zero-sum game IYO?
Is the Global Economy a zero-sum game IYO?
Most of the US economy is the financial sector where nothing tangible is produced. General Motors makes money through GMAC but loses more making cars. Manufacturing is rapidly being exported which leaves only agriculture. There is practically NO manufacturing investment in fixed assets. With the aging of the population, medical services are a growth industry though. This is NOT healthy.
Gold closed at $657. Time to buy!
Edwin
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