I feel like buying more gold
Everyone thinks gold is overbought right now. I honestly believe it is still a buy. I am adding to my position. I love that everyone thinks commodities are a sell right now because they went up and there is the assumption that it is one way. Ben has told me multiple times that the last peak in gold inflation adjusted is 2000. So it is 1/3 off the highs.
I am going MoMo. You would have to yank the GLD out of my dead hands right now. You cannot tell me that gold should not go up on a day when Ambac is about to go to zero.
I am going MoMo. You would have to yank the GLD out of my dead hands right now. You cannot tell me that gold should not go up on a day when Ambac is about to go to zero.
posted by MattKelly54 at
7:12 PM
11 Comments:
Just so we can set the record straight, its all dependent on your choice of deflator.
CPI-u = $2300 peak gold
M2 - $2750 peak gold
M3 - $4300 peak gold
Alternative CPI (JW) - $4150 peak gold
Non-Financial Credit - what i use as monetary inflation gauge - $4850 peak gold.
So even if you use the very incorrect, mangled, out-of-touch with reality, numerous times recalculated to pay less in social security benefits limit wage increases of unions, CPI-U then you still would have almost a triple on your hands.
I think gold should probably take a breather here for a second, but it doesn't matter if your taking a longer term view.
GOLD is going to continue to eat the stock market for breakfast....
Btw for all you naysayers out there, I calculated the annual return of gold and the S&P since 1968 and gold has an annualized return of 7.9% and the s&p has a return of 7.7% meaning that not only has gold outperformed broad equities but has also outperformed the inflated index return that suffers from an inherent survivorship bias.
GOLD IS A BUY. ALL FIAT CURRENCIES ARE SELLS. STOCKS THAT HAVE PRICING POWER ARE BUYS. STOCKS THAT LACK PRICING POWER AND ARE AT PEAK MARGINS ARE SELLS.
bb
why 1968?
"So even if you use the very incorrect, mangled, out-of-touch with reality, numerous times recalculated to pay less in social security benefits limit wage increases of unions, CPI-U then you still would have almost a triple on your hands."
I love these comments, and they are fun. But, we're young. Those guys are the most well studied, educated minds in the monetary policy game. BB himself is practically the biggest student of the great depression out there. (at least that's what I understand)
Mind you, I'm not saying you are wrong. All I am asking is, has anyone thought, just maybe they actually do know what they are doing? NOBODY ever seems to stop for a second, take a breath, and ask that question. I'd think it's worth asking!!!!
I mean, go back and do google archive searches over time. You find all the same things in the press back then as we do now. Yeah the headlines are slightly different, but not really. The press, media, economists, stockpickers, pm's, analysts, etc, out there question policy, the economy, geopolitics, etc...yet, equity markets generally romp higher...and that timing thing, well, it's a bitch.
I guess the more things change, the more they stay the same...people at least.
for the record, i still agree with the long term gold call...haven't run the commercial screen to see what i think the short term outlook is.
RVB-
I agree with you. How do we account for the rise in oil from $10 to $90? The rise in wheat? The rise in gold. The rise in copper? The rise in silver? The rapid rise in health care costs? The rise in home prices. Is it just a technical trade?
What would happen if labor costs went up 3 fold? It would probably fix the economy.
The unemployment rate is less than 5% right now. Dollars are flowing back into the country demanding goods and services back from the U.S..
There is absolutely no reason to be lowering rates right now except that people cannot pay their bills. The reason that people cannot pay their bills, is not that the economy is slack, but because we are overlevered. Our balance sheets are messed up badly. So the only options to fix the problem are either let them default or to change the income to change the income to interest. If labor costs start to rise, watch out.
Unit labor cost is the critical knob to inflation. I do not see any way that it can come down without creating an absolute debacle. The only way is to dilute the currency enough to get things back in balance.
Go back and do a historical search on what happens to our country at the end of expensive wars. Go back and google other civilizations that have fought expensive wars. When was the last time we had bad inflation?
Wars produce inflation. They are extremely expensive and they have a multiplier effect. Read history on that.
Long Gold. Short Term. Long Term. Medium Term.
Read Empire of Debt. If you like economists and academics so much you should really consult the dead and not the living in my opinion. The dead are the most experienced of us all.
These douches that calculate the CPI. Argentina thought they were calculating CPI right. I am sure they had crack economists on the team there. I am sure they were learned people. Kaboom.
The current Grant's interest rate observer is a case lesson in what is going on.
Argentina, China, Russia all seeing inflation near double digits.
From Bloomberg On the Markets:
"It was truly a golden age, and it is in the process of being over. Inflationary pressures are beginning to mount."
Guess who?
Alan Greenspan. I believe I may have to go long deflation if this monkey thinks there is inflation.
He might be a monkey, but how can you NOT see inflation? I bought a box of cereal yesterday for $4.50. That is probably 50% more than it was 2-3 years ago.
Soda is 3.99 a 12 pack. It was 2.50 a 12 pack as recently as 2003.
If you don't see huge inflation at the current time, you are either oblivious or your name is Ben Bernanke. Now, I don't know where it goes directionally from here, but I'm guessing that cutting rates will only help it escalate.
$2.50 a 12 pack? On sale, in 2003. Not regular price. But, yeah, it's up a bit. Cereal's been in the $3.50 a box range since high school. But anyways, my guess is that the CPI can get that stuff correct. That's where those people go out and look at the boxes and sizes and so on.
the war comments are interesting. I've never looked into that. Greenspan comment interesting too. The foreign markets are pretty scary.
I'm also curious to know what the aggregate impacts of productivity and technology are. The world is flat is a good read.
Wish we'd had more macro stuff in school...frustrating.
BUENOS AIRES (Dow Jones)--Argentine President Nestor Kirchner's administration has let go 20 statisticians and data collectors at government data agency INDEC who began alleging in January that the government is downwardly manipulating monthly consumer price index reports, union leaders said Friday.
The statisticians were released upon the expiration of their employment contracts, union representative Daniel Fazio told Dow Jones Newswires. Of those let go, four had testified against Kirchner's price control point man, Domestic Commerce Secretary Guillermo Moreno, in an investigation into the alleged data manipulation, he added.
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