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phirang
09-30-08, 11:25 AM
And what will happen to gold once the money in treasuries moves out? I don't think gold stands a chance...

*T*
09-30-08, 12:11 PM
why? Where will it go? Gold can rise with rising yields.

Contemptuous
09-30-08, 05:12 PM
Why? Where will it go? Gold can rise with rising yields.

*T* - Indeed it can and does. A steepening yield curve, and / or rising rates generally, are a standard corollary of a gold bull market. And we can also witness an unfolding massive paradox, with the dollar receiving one last very large bid in an extended period of global deflation. I've had two newsletters I read (and have been planning to scrap as they irritated me so much with their paradoxes) reiterate this over and over again in recent months. I thought the idea nonsense then, and still do, but I do believe that large paradoxes can occur and persist for extended periods of time. A strong dollar persisting for the next 2-3 years would build a pressure cooker under gold, as presumably all currencies then have free rein to exercise massive debasement in that deflationary environment.

Gold bulls may, or will be, both wrong and right, all at the same time. Then a good while later they become *very right* but had gotten their timing totally wrong. So Gold skeptics like Phirang will be right short term, and then quite markedly wrong about Gold's core function later. But of course he may do better than all of us Gold bulls, by having remained skeptical all this time and then buying it at rock bottom in a year or even two years, in the very depths of a global depression! :D There is no guaranteed "justice" in the world for those who've thought everything through and have been correct in principle. Reality is full of paradox, and a hard taskmaster.

phirang
09-30-08, 05:16 PM
*T* - Indeed it can and does. A steepening yield curve, and / or rising rates generally, are a standard corollary of a gold bull market. And we can also witness an unfolding massive paradox, with the dollar receiving one last very large bid in an extended period of global deflation. I've had two newsletters I read (and have been planning to scrap as they irritated me so much with their paradoxes) reiterate this over and over again in recent months. I thought the idea nonsense then, and still do, but I do believe that large paradoxes can occur and persist for extended periods of time. A strong dollar persisting for the next 2-3 years would build a pressure cooker under gold, as presumably all currencies then have free rein to exercise massive debasement in that deflationary environment.

Gold bulls may, or will be, both wrong and right, all at the same time. Then a good while later they become *very right* but had gotten their timing totally wrong. So Gold skeptics like Phirang will be right short term, and then quite markedly wrong about Gold's core function later. But of course he may do better than all of us Gold bulls, by having remained skeptical all this time and then buying it at rock bottom in a year or even two years, in the very depths of a global depression! :D There is no guaranteed "justice" in the world for those who've thought everything through and have been correct in principle. Reality is full of paradox, and a hard taskmaster.

I'm not convinced we'll have a global depression: a few trillion of wealth need to be repatriated, and voila!

Contemptuous
09-30-08, 05:52 PM
Phirang - I have a very immoderate position in silver bullion. The redheaded stepchild of gold. Silver, which in an extended global deflation will get taken out to the woodshed and summarily decapitated. I go forward on pure faith in the thesis of unchecked fiat monetary abuse, as far as the eye can see. A truly flat footed, stupid way to invest, no doubt! :D

jtabeb
09-30-08, 07:05 PM
Phirang - I have a very immoderate position in silver bullion. The redheaded stepchild of gold. Silver, which in an extended global deflation will get taken out to the woodshed and summarily decapitated. I go forward on pure faith in the thesis of unchecked fiat monetary abuse, as far as the eye can see. A truly flat footed, stupid way to invest, no doubt! :D

One thing I've learned about the FED and Treasury, when they say "BREAK LEFT" you had better "BREAK RIGHT" or you are going to get your ass handed to you. If the FED is talking "Mother of all Deflations" (Break Left) as they presently are, you'd better be ready to (Break Right) "Mother of all inflations" or ...

See Ty Andros and "Crack-Up BOOM" if you want to see what's really going to happen. (this happens to be why I would be buying real estate now or soon). Market clearing prices have been reached on many forclosures in nice places, and if not they are renting ALREADY for what the market will allow. I saw a good example of this. Brand new housing development where my mother-in-law rents. $300,000 houses renting for $1100-1200 a month, implied price in the $150,000 range, and you can buy them from the builder at that price now or just keep renting. You can make money on that as a buyer assuming your interest rate is below 6.5% on a 30 year fixed.

phirang
09-30-08, 07:17 PM
One thing I've learned about the FED and Treasury, when they say "BREAK LEFT" you had better "BREAK RIGHT" or you are going to get your ass handed to you. If the FED is talking "Mother of all Deflations" (Break Left) as they presently are, you'd better be ready to (Break Right) "Mother of all inflations" or ...

See Ty Andros and "Crack-Up BOOM" if you want to see what's really going to happen. (this happens to be why I would be buying real estate now or soon). Market clearing prices have been reached on many forclosures in nice places, and if not they are renting ALREADY for what the market will allow. I saw a good example of this. Brand new housing development where my mother-in-law rents. $300,000 houses renting for $1100-1200 a month, implied price in the $150,000 range, and you can buy them from the builder at that price now or just keep renting. You can make money on that as a buyer assuming your interest rate is below 6.5% on a 30 year fixed.

Central Banks are all about maintaining expectations, i.e. massive dissimulation.

The treasury trade is coming to a close. At this point, we either have 1) Grozny circa 2000 or 2) Gosbank and 5-year plans.

Contemptuous
09-30-08, 08:20 PM
Jtabeb - the question here of course is whether it's the FED talking to us, or the market itself.


If the FED is talking "Mother of all Deflations" (Break Left) as they presently are, you'd better be ready to (Break Right) "Mother of all inflations" or ...

jtabeb
09-30-08, 11:05 PM
Jtabeb - the question here of course is whether it's the FED talking to us, or the market itself.

Sheeple are the markets right now (sheeple's CONFIDENCE, I should say), so by inference, US. (one and the same)