silver train leaving the station?

[Spartacus]

Re: silver train leaving the station?

Keeping in mind China was the last country to abandon Silver as currency, and I believe until that point had the longest continuous record of using Silver as currency.

Either China or India hold the record.

This just in from the goldenjacka$$/Chris Laird

It should always be noted that silver has gained much greater acceptance as a monetary asset. The Chinese Govt in February announced a new objective to put into action, for diversifying their reserve assets to include silver and platinum. This is huge news. Never before has the silver metal been included in national sovereign reserves management, an unprecedented event.

[charliebrown]

Re: silver train leaving the station?

This just in from the goldenjacka$$/Chris Laird

It should always be noted that silver has gained much greater acceptance as a monetary asset. The Chinese Govt in February announced a new objective to put into action, for diversifying their reserve assets to include silver and platinum. This is huge news. Never before has the silver metal been included in national sovereign reserves management, an unprecedented event.

[c1ue]

Re: Peak cheap oil....

I understand the points, but consider the counter arguments. All you wrote is well disseminated and fully reflected in the market. You, I and about a billion other players out their have all acted on these concepts, hence it should be the least rewarding outcome. It's much like betting on an inside tip that everyone knows about. The odds reflect the knowledge and the payoff has a high chance of being net negative.

I don't agree that what I said is well disseminated. For one thing, China alone cannot finance the ongoing US/Fed credit creation spree. China has been out of the Treasury market for over a year - and the usual suspects (Japan, UK, Canada) simply cannot put a significant dent in the $2T a year which the US is accumulating in increased debt.

So on the face of it, your argument that 'everyone knows' is not valid.

Here's some concepts that may not be reflected in the market place. Most of these goods are significantly inferior to what industrialized nations are making. I've a large collection of broken items that failed withing the first year of production, even their damn thread seems to disintegrate in water and all made in China. As consumers become more in tuned to these unexpected replacement costs, they'll reject enough of the Chinese goods to cause more R&D as well as quality control costs to be incurred raising the price.

Cheap peasant labor is running out. I had a friend working in China on a U.S, project and he said 7 years ago trainloads of hungry peasants arrived in Peking every day. This isn't the case anymore, now wages are rising as factories compete of workers.

Most of the Chinese construction and infrastructure is very shoddy. Building shake like a leaf, concrete crumbles like sand, steel snaps like a twig, copper wiring so impure twice the gauge in required to carry the same current. These short-cut constructions goofs will incur a high maintanace cost as infrastructure wears out prematurly but the debt doesn't.

Most commodities are already pricing in a 70% haircut in the U.S. dollar. Should this actually happen, you may or may not get a panic spike to sell into but longer term they already have a lot and maybe to much catastrophe priced in. Note any long term chart and you'll notice these spikes are only 3 to 6 months in duration and it's all down hill their after.

The problem with all you note above, is even if the Chinese crap is crap, it is still cheaper to replace it every other year than buy 'made in America' - even were you able to find it.

Secondly it is a stereotype that all Chinese output is low quality and low value added. China now exports all sorts of high value added items including electronics, machinery, as well as basic inputs into food and manufacturing (chemicals).

Last but not least, I think Chinese investment advisers have already hedged the government reserves in anticipation of a collapsing dollar and If there's one thing I've learned, most "expert investment advisers", are not worth the diploma they received in their Cheerios box. If they've hedged and hedged poorly, an unwinding of these positions could flood the market with commodities, derivatives or god knows what they own.

I'm not sure where you get this idea that China has fully hedged its existing dollar portfolio against a US printing spree. Who would be the counterparty?

What you aren't considering is that China has basically written off its existing $1.6T hoard - it is the chip which keeps the US from making China the 'Iraq' or 'Afghanistan' of 2012. What China has actually done is to put all new and ongoing accumulations of dollars into resource and capital (in the manufacturing sense) accumulation. What little hedging exists is primarily via hedged trade agreements with other nations - which still employs the dollar but makes the dollar impact neutral to China and the partner.

Not the same thing at all.

[jiimbergin]

Re: Peak cheap oil....

Eric Sprott: "There Is No More Silver Left"

"There's $22 billion of silver available in the world, of which the ETFs already own half, and between you guys and us we probably own the other half... Which means there's nothing left."

http://www.zerohedge.com/article/eri...re-silver-left

[dropthatcash]

Re: Peak cheap oil....

Opportunity comes to those that wait.

Depreciating dollar= rising natural gas prices
Economic recovery with lower or higher oil= rising natural gas prices as nat gas price is very sensitive to industrial use
Destabilizing middle east= rising natural gas prices
Carbon tax=rising natural gas prices
Natural gas hungry oil sands projects= higher natural gas prices
The only near instant-on base load technology to compliment wind energy project loads= natural gas
Foolish pundits saying "This time it's different"
http://www.csmonitor.com/Business/Th...ural-gas-ratio
= rising natural gas

As an aside, I bought bars of silver in 1990, direct from the mine Sunshine mining, at a little over $4 on oz. My one and only reason was $4 was at of below world cost of production. A can't go wrong price!!! Well, while it didn't decline below that, it stayed flat for 15 years! Lucky for me I only bought a couple 100oz'ers as stocks far outperformed this investment. My point is, even buying at a can't loose price can be a lousy investment. (but it was a valuable lesson ; )

[grapejelly]

Re: Peak cheap oil....

my likely scenario is for silver to go up to $40 or $45 in the next 6 weeks, with some sharp $2 to $5 correction periods lasting 3 to 5 days, then at around $45 or so silver will fall to $25.

If silver falls to $25 - $27 soon then this is out the window, but so far, I see scenario #1 as likely.

[jpetr48]

Re: Peak cheap oil....

Most commodities are already pricing in a 70% haircut in the U.S. dollar. Should this actually happen, you may or may not get a panic spike to sell into but longer term they already have a lot and maybe to much catastrophe priced in. Note any long term chart and you'll notice these spikes are only 3 to 6 months in duration and it's all down hill their after.

Ok so thinking two steps ahead where is the next rotation?

[jpetr48]

Re: silver train leaving the station?

Our own Finster who posts this forecast on market outlook blog has projected the decrease in PM today in his forecast.Looks like this could last awhile. We will have to wait and see.
BTW for those new- Finster does this not to direct investment strategy nor as someone who has all the answers rather as a service to itulipers.

http://users.zoominternet.net/~fwuth...MarketsOutlook

[aaron]

Re: silver train leaving the station?

I had to sell my options at $33 dollar silver. The market was closed when silver hit $34.50. Basically, 30% of my profit!

Moral of the story: Even when you are right with a paper trade, you can still be wrong.

[dropthatcash]

Re: Peak cheap oil....

The problem with this concept is that every item you mention there is relative.

Let's say the US devalues by 100% (1/2). What is to keep China from doing the same as it has been all this time?

Ultimately the average Chinese can and does live on far less than the American - just cutting the American's real wages in half doesn't help much, especially since said American is buying most of his stuff from the Chinese.

And don't forget, the devaluation by half equally cuts American savings in half. This doesn't matter if you own the Capital - as in the rent producing land/factory/IP or whatever - but it does f*** every other American (the 99%).

Let's not take out eyes off the ball: the choice we have isn't inflation or deflation.

The fork in the road is between $6 trillion in overseas cash being repudiated and flooding back all at once (i.e. loss of dollar reserve currency status) or shortages in the US for gasoline, food, and consumer goods.

I understand the points, but consider the counter arguments. All you wrote is well disseminated and fully reflected in the market. You, I and about a billion other players out their have all acted on these concepts, hence it should be the least rewarding outcome. It's much like betting on an inside tip that everyone knows about. The odds reflect the knowledge and the payoff has a high chance of being net negative.

Here's some concepts that may not be reflected in the market place. Most of these goods are significantly inferior to what industrialized nations are making. I've a large collection of broken items that failed withing the first year of production, even their damn thread seems to disintegrate in water and all made in China. As consumers become more in tuned to these unexpected replacement costs, they'll reject enough of the Chinese goods to cause more R&D as well as quality control costs to be incurred raising the price.

Cheap peasant labor is running out. I had a friend working in China on a U.S, project and he said 7 years ago trainloads of hungry peasants arrived in Peking every day. This isn't the case anymore, now wages are rising as factories compete of workers.

Most of the Chinese construction and infrastructure is very shoddy. Building shake like a leaf, concrete crumbles like sand, steel snaps like a twig, copper wiring so impure twice the gauge in required to carry the same current. These short-cut constructions goofs will incur a high maintanace cost as infrastructure wears out prematurly but the debt doesn't.

Most commodities are already pricing in a 70% haircut in the U.S. dollar. Should this actually happen, you may or may not get a panic spike to sell into but longer term they already have a lot and maybe to much catastrophe priced in. Note any long term chart and you'll notice these spikes are only 3 to 6 months in duration and it's all down hill their after.

Last but not least, I think Chinese investment advisers have already hedged the government reserves in anticipation of a collapsing dollar and If there's one thing I've learned, most "expert investment advisers", are not worth the diploma they received in their Cheerios box. If they've hedged and hedged poorly, an unwinding of these positions could flood the market with commodities, derivatives or god knows what they own.

[c1ue]

Re: Peak cheap oil....

One thing that has concerned me is that many emerging markets (due to cheap labor) can produce products far below what developed nations can.

If an emerging market can produce a widget for X$, and it takes the U.S. 2X$ or 3X$, you have to devalue the $ an awful lot before you put a dent in their exports and improve your own. In fact, not only will you be creating inflation for products at home, you'll be importing inflation as prices of imports rise, but still remain below the cost of production here. It seems to me that if China were to actually bow to the pressure to rapidly raise the Yuan, we might see a POOM effect until prices finally rose enough where our widgets would be competitive with theirs.

The problem with this concept is that every item you mention there is relative.

Let's say the US devalues by 100% (1/2). What is to keep China from doing the same as it has been all this time?

Ultimately the average Chinese can and does live on far less than the American - just cutting the American's real wages in half doesn't help much, especially since said American is buying most of his stuff from the Chinese.

And don't forget, the devaluation by half equally cuts American savings in half. This doesn't matter if you own the Capital - as in the rent producing land/factory/IP or whatever - but it does f*** every other American (the 99%).

Let's not take out eyes off the ball: the choice we have isn't inflation or deflation.

The fork in the road is between $6 trillion in overseas cash being repudiated and flooding back all at once (i.e. loss of dollar reserve currency status) or shortages in the US for gasoline, food, and consumer goods.

[metalman]

Re: The Comming Great Depression...So funny I could cry.

Trade-able of course but your stance seems decidedly biased to the long side. As I posted yesterday, Short term I still see positive action in metals and energies but this will eventually collapse as all trees eventually return to the ground. The posted chart is meaningless as it's priced in a floating rate currency. An inflation adjusted chart will show you that oil has spend more years declining than advancing. Any argument for oil here could have easily been made in 1979 when reserves were projected to expire in 30 years, OPEC has a stranglehold on the market and the U.S. was predicted to collapse in bankruptcy. (Trust me, I lived it and even bought Douglas M. Cassey's; "The Coming Great Depression" in 1980 at age 19). Had you bought oil then you'd have watched oil decline for 20 years eventually hiting a 50 year low!!! Something that nobody could have conceived of at the time. I'm simply pointing out that every trade/investment/dog track tip has two equally valid arguments for and against it. Being biased to only one side of the market is a sure means to failure. Just ask Mr. Cassey still slinging his depression crap. Even if he's eventually right, you'd have waited half a life time and missed about a zillion chances to make good investments along the way.

i shoulda said explained the charts... #1 from ej's report may 2008 when oil 130? or so... shows it plunging & rising again... #2 is from feb 2011 shows it plunging & rising again... the actual chart... google peak cheep oil cycle for details.

you a covering doomer? welcome to the tulip!

[LargoWinch]

Re: Peak cheap oil....

Inflation is heating up in these countries, wages are rising. Even a modest (by third world standards) rate of 9%, doubles wages in 8 years. Were also not considering a collapse in China/India as these nations have bloated corrupt governments. I doubt even one of the banks are being run on the up and up and a stumble will cause a cascade of bankruptcy's. Consider too, that 3 trillion in treasury's only buys enough food to feed China for a year. We complain about our lousy politicians but a lot of these guys in China and India would make Genghis khan blush.

I remember counciling euphoric friends in the late 1990's bull market. They'd bought the line "I'm invested for the long term cause prices always go up". I'd point out that shares in GM hit an all time high in 1955 and never exceeded that price again (real dollars) (Now of course that GM doesn't even exist and those shares are worthless). GM must have been a "no brainer buy" to our 1955 investing equals and any argument against it as an investment must have been something like this;

"We just crushed Germany and Japan!, We're the mightiest nation the world has ever seen. We have a huge baby boom that will all need cars, quality is at an all time high and GM's the biggest company and eating the competition up in the world and your suggesting it might not be the best investment ever?!? Who's the competition? Flattened Germany and Japan HawHawHaw, "

dropthatcash, I have been following some of your recent posts; well put and pretty good!

Please allow me to ask you, why the now sudden iTulip activity despite joining in 2008?

[LargoWinch]

Re: Peak cheap oil....

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Your attachment/link is not working dropthatcash.

[dropthatcash]

Re: The Comming Great Depression...So funny I could cry.

really? here's ej's pco chart/forecast from May 2008...



here's what went down...



look darn trade able to me.

Trade-able of course but your stance seems decidedly biased to the long side. As I posted yesterday, Short term I still see positive action in metals and energies but this will eventually collapse as all trees eventually return to the ground. The posted chart is meaningless as it's priced in a floating rate currency. An inflation adjusted chart will show you that oil has spend more years declining than advancing. Any argument for oil here could have easily been made in 1979 when reserves were projected to expire in 30 years, OPEC has a stranglehold on the market and the U.S. was predicted to collapse in bankruptcy. (Trust me, I lived it and even bought Douglas M. Cassey's; "The Coming Great Depression" in 1980 at age 19). Had you bought oil then you'd have watched oil decline for 20 years eventually hiting a 50 year low!!! Something that nobody could have conceived of at the time. I'm simply pointing out that every trade/investment/dog track tip has two equally valid arguments for and against it. Being biased to only one side of the market is a sure means to failure. Just ask Mr. Cassey still slinging his depression crap. Even if he's eventually right, you'd have waited half a life time and missed about a zillion chances to make good investments along the way.