Derivatives the new 'ticking bomb'

[raja]

Re: Derivatives the new 'ticking bomb'

Raja -

Please take note of the 30%+ money supply growth (and rising) Rajiv was commenting on. "hyper" or not, that's a pretty stiff headwind for your treasury positions to preserve wealth against. At what point in this already feverish growth rate do we slide subtly into the "hyper" numbers?

At those money growth rates, erosion of US fixed income assets appears to be progressing reassuringly gradually, but in a stealthy way it is really more like a ravenous wolf. You can maybe fix it handily enough by upping your allocation to PM's another full ten percent.

I would absolutely hold the whole idea of the desirability of "yield" fixed income investments at arms length however, as it obscures a negative real yield often enough which can be dangerously unquantifiable at times precisely like the present one. An increase of a gold allocation is probably mis-timed for right now though, as the prospect of a sizable correction is getting very high.

However increasing allocation to PM's requires one to have confidence in the large future prospects of this asset class via a perception that inflationary problems will persist and grow sharply further, and you appear to be one of our greater skeptics in that regard? You may be right in that skepticism, but 30%+ growth in current money supply is not reassuring that the near future trend is complying with your relatively cautious allocation to inflation proofing your assets.

Otherwise there are many interesting things you are doing with your investments and retirement plans. It sounds great in many respects. I very much envy you the small farm, and your new lifestyle! ;)

Perhaps one thing that will help counterbalance the money growth is that, as I understand it, Treasury bill rates will rise over time with inflation. (Around 1980 they went to 14%.)
So if one reinvests short-term continuously, the loss will be limited by the fact that reinvestment rates are rising.
Of course, this would be different if one were invested in long-term bonds.

On today's dip down to 978, I increase my gold allocation.
Why do you think gold is due for a correction?

[Guest]

Re: Derivatives the new 'ticking bomb'

Why do you think gold is due for a correction?

Uhm, how about 50% up in one year? We'll see one hundred percent up in one year as this market heats up a little more, but it's not there yet. At present, one would expect the odds of a stiff correction in the PM's is well overdue.

I see a few people here are picking up some sizeable chunks of more gold recently. Perhaps not prudent after a 50% run-up in 12 months. The right time to buy is unmistakeable - the price is plunging on yet another 'deflation scare' and everyone is reaching for their wastebaskets with urgency to 'lose their breakfasts'. Then it's a great time to buy!

[touchring]

Re: Derivatives the new 'ticking bomb'

I'm not worried about corrections, i'm worried about whether the numbers in my gold books are good if the commodities futures market goes kaput! :eek:

Uhm, how about 50% up in one year? We'll see one hundred percent up in one year as this market heats up a little more, but it's not there yet. At present, one would expect the odds of a stiff correction in the PM's is well overdue.

I see a few people here are picking up some sizeable chunks of more gold recently. Perhaps not prudent after a 50% run-up in 12 months. The right time to buy is unmistakeable - the price is plunging on yet another 'deflation scare' and everyone is reaching for their wastebaskets with urgency to 'lose their breakfasts'. Then it's a great time to buy!

[Guest]

Re: Derivatives the new 'ticking bomb'

Touchring - unless you are Bart, or can afford to commission real-time forecasts from Bart, (if it were me) I would avoid any pooled commodity ETF that may even be remotely suspected of employing futures. Especially when those ETF's are getting hugely popular.

Bart puts himself right on the front line buying and selling his own futures contracts. Either he has a death wish, or he's considerably more astute than you and me. Probably "astute" edges out "death wish" in there somewhere as he seems to be prospering. Very understated guy is our Bart.

[GRG55]

Re: Derivatives the new 'ticking bomb'

...Bart puts himself right on the front line buying and selling his own futures contracts. Either he has a death wish, or he's considerably more astute than you and me. Probably "astute" edges out "death wish" in there somewhere as he seems to be prospering. Very understated guy is our Bart.

Bart is actually a machine; programmed to consistently beat the house. Don't tell anybody. Especially Finster. ;)

[c1ue]

Re: Derivatives the new 'ticking bomb'

With Treasuries you're bled to death slowly over time by inflation . . . . unless you're predicting hyperinflation, c1ue? :eek:

I predict nothing.

I have, as I've noted numerous times, moved all money out of the US and US$ - except what is needed for my new service business.

This business notably has only marketing, sales, and human labor as inputs - no physical commodities of any type. I'm already starting to see the expected influx of people looking for employment after retail and school jobs are contracted.

Draw your own conclusions.

[touchring]

Re: Derivatives the new 'ticking bomb'

Touchring - unless you are Bart, or can afford to commission real-time forecasts from Bart, (if it were me) I would avoid any pooled commodity ETF that may even be remotely suspected of employing futures. Especially when those ETF's are getting hugely popular.

Bart puts himself right on the front line buying and selling his own futures contracts. Either he has a death wish, or he's considerably more astute than you and me. Probably "astute" edges out "death wish" in there somewhere as he seems to be prospering. Very understated guy is our Bart.

Yup, i'm getting the cold feet. BS was the last straw, the system's too corrupted, we'll never know who is lying.