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Economy : something I just don't understand - 11/16/2008 9:12:51 PM   
Termyn8or


Posts: 18681
Joined: 11/12/2005
Status: offline 		The dollar is down. We all know that. But at the same time precious metals are down. This does not make sense to me. The housing crash makes sense because it was an artificially created bubble, but metals ? A few months ago platinum was around two grand an ounce. Aluminum and copper were at an all time high and scrappers had their day to be sure.

I am not a stupid Man, but I am really at a loss to explain how these conditions arose. Is there some sort of glut on the market or something ? Is it that so many people are scrapping now that the demand is seemingly met ? What is it ?

I like to look at the big picture, but this is somehow obscured. Silver is down to nine bucks ? How can that be ? Silver was touted as one of the best investment possible a few months ago, and I agreed because it has alot of uses in industry and actual mining and refining had trouble keeping up with demand. Demand has increased, or it would have except for the economic downturn, and my recommendation was to buy it for long term. I expected prices to be stagnant, no growth for possibly two years, but for it to go down ? Mr. Spock would say "This is not logical". I would have to agree.

I know that circumstances in this economy are not normal, but it's as if we are in some wierd universe where the laws of physics are different or something. How can the dollar go down and gold also go down ? Well maybe gold hasn't gone down really but it certainly hasn't gone up, it isn't even at eight hundred I think. And with actual facts on consumption and production of silver, how the hell can that go down in relation to a dollar that is obeying the law of gravity right now ?

Perhaps someone can shed some light on this phenomenon.

T
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RE: Economy : something I just don't understand - 11/16/2008 9:37:32 PM   
Honsoku


Posts: 422
Joined: 6/26/2007
Status: offline 		Commodities had a bubble as well. Right now, there is a lot of money being pulled out of all markets. Even "safe" assets are seeing drops in value.

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RE: Economy : something I just don't understand - 11/16/2008 9:39:38 PM   
NormalOutside


Posts: 622
Joined: 1/8/2008
Status: offline 		I can't really help you, but I'll share your confusion.  I feel the same way about oil.  We're running out, we're at war, we haven't figured out (yet) how to stop needing it, the economy is in a nose-dive..... but suddenly oil is cheap again.  Yay?  :-S

I've head a good-sounding explanation for the crash of commodities like gold, but don't remember what it was or where I saw it.  I'll let you know if I remember before someone else fills us in.


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RE: Economy : something I just don't understand - 11/16/2008 9:41:20 PM   
NormalOutside


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quote:

ORIGINAL: Honsoku
Commodities had a bubble as well. Right now, there is a lot of money being pulled out of all markets. Even "safe" assets are seeing drops in value.

I imagine now is a good time for the rich to scoop up commodities (and stocks, and property) for cheap.  Transfer of wealth anyone?


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RE: Economy : something I just don't understand - 11/16/2008 9:43:47 PM   
popeye1250


Posts: 18104
Joined: 1/27/2006
From: New Hampshire
Status: offline 		Normal, that's because oil is a "commodity" too.
You *know* that gold is on the way down when you start getting fliers in the mail wanting you to buy gold coins like on late night t.v. now!
LOL, and their value will "always go up!"

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RE: Economy : something I just don't understand - 11/16/2008 10:14:10 PM   
Hippiekinkster


Posts: 5512
Joined: 11/20/2007
From: Liechtenstein
Status: offline 		If I were sitting on a major nest egg, the last thing I'd be doing is buying precious metals. Sure, silver has industrial utility, but in a global slowdown, the demand drops. So much for that particular buy-side rationale.

Precious metals, to my mind, have no intrinsic value outside of their industrial utility. They only have the value that people, collectively, agree that they have. In that respect, Au, Ag, Pt, et cetera are no different than "fiat currency".

I would be looking for income-producing assets, preferably producing something which needs to be replaced periodically, like soap or beer or clothing. The medium of exchange isn't really relevant; if everyone believes that seashells have value, and I can sell one seashell's worth of goods for 1.1 seashells, I'm profiting. Ideally I would want a product that has high price inelasticity of demand; but that's wishful thinking.

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RE: Economy : something I just don't understand - 11/16/2008 10:22:23 PM   
Termyn8or


Posts: 18681
Joined: 11/12/2005
Status: offline 		I think Hon's shortwinded post might be a good explaination. Many of the speculators have dropped it, some because they were doing it on credit, others for other reasons.

It's really the only thing that makes sense.

popeye, I have noticed more commercials for companies that want to buy gold and silver, people's jewelry and even silverware. How does that fit now ?

These are indeed some strange times in which we live. I think there are abnormal influences on the economy and those are obscuring the big picture. The fact is this, reality must make sense, it is just figuring out why that gets difficult.

T

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RE: Economy : something I just don't understand - 11/16/2008 11:19:25 PM   
DomKen


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Joined: 7/4/2004
From: Chicago, IL
Status: offline 		What seems to be happening is the deflationary effects of the stock market decline is being felt in the commodities. A lot of "on paper" money has been wiped out which forces people holding commodities to sell to gain liquidity. With all that money wiped out there aren't lots of people with available currency to invest in precious metals or much of anything.

Realistically during a deflationary period, which we seem to be teetering on the edge of, nothing will retain its value. Putting your liquid capital into something as basic as a guaranteed rate CD in a healthy bank might be the best return you can expect. even if the rate is fixed at 1 or 2%.

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RE: Economy : something I just don't understand - 11/16/2008 11:34:54 PM   
Termyn8or


Posts: 18681
Joined: 11/12/2005
Status: offline 		DK, sounds like sound advice, but I would prefer the liquidity until the dollar regains a bit of strength. One or two percent will not keep you ahead of inflation.

HK, soap and beer ? well I could sell the soap but the beer isn't going to last forever.

Anyway, historically gold prices were affected mainly by the value of the dollar, something which most people take in an upside down way sort of. That is that the value of gold didn't really change, it was the dollars that changed. Now something else has changed. With the prices we pay for things one would think gold would be around two grand, but it isn't.

I am still unclear on this, unless speculators pushed the price up over the last decade or so. Nothing else makes much sense right now. Speculators got cheap credit, the credit industry is in bad shape. It makes sense.

As bad as things are I'll say this. Some people made alot of money.

T

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RE: Economy : something I just don't understand - 11/17/2008 4:49:24 AM   
SilverMark


Posts: 3457
Joined: 5/9/2007
Status: offline 		Stag deflation, I had read about it before and after re-reading about it over and over again I finally got through the economic terminology to the point where I could understand it. Basically the economic downward spiral gets to the point where there is little if any intrinsic value to commodities, money or goods.
Scary prospect, and to some degree if not corrected deadly for an economy.  Instead of the the monetary value dropping against the value of the item purchased, the item purchase and monetary value drops at a similar rate to where neither has value, or so little value it no longer matters.
When they discuss large corporations they always speak of the bottom being only the intrinsic value of the assets of a company but, in a deflationary period even that value is diminished due to the fact that no one wants the assets at any price or there is not enough value in the money used to purchase that asset that the asset therefore has no value. <--------took me forever to really understand due to the way the economists write but, I think that is it in a nutshell....If I am incorrect I am certain someone will correct me.

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RE: Economy : something I just don't understand - 11/17/2008 5:06:42 AM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		Term,   dont be fooled.

Much of the precious metals are "on paper".   there is not proof that such metals physically exist.

None.

Why oh why do we never get far on auditing Fort Knox?

As upstanding as the banks are, does anyone beleive that the gold in their vaults is actually there?   How about that voodoo accounting did not count those reserves 2x ???

There is a huge disconnect between metals in your hand, and metals on paper.   Who do you trust?

Then consider Lindsey Williams prediction  of oil 50-60$    He said the price will go that low- and the powers will hoard up the metals- then the  increase comes.


Now  more then ever I urge people to question every report as being a spy op.

I beg you to pump the old folks for hints of the depression, etc.

Smash the fucken TV.  The RF fields in it rattle the skull.  It sucks you in- deluding the mind.

How does one explain the lack of real plans to solve todays problems?

Silver could in fact drop to $5 an ounce.  But if we have hyper inflation like Germany 1922, all the bail outs on the planet will mean nothing.

So I ask you, ...many on the planet will not be here 2013.  Giving the choice of starving to death, or suicide,  which is better?

RF beams effect the electric impulses in the brain.  The brain then has unnatural impulses.  So weather intended or not...

When you blow the heating block on the car, you can still drive maybe 10 minutes....  Thats where we are at.

Dont trust any report.  The powerful will do fake announcements to grab the gold for their private, bunker -vault.  You can count on it.

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RE: Economy : something I just don't understand - 11/17/2008 5:19:45 AM   
TNstepsout


Posts: 1558
Joined: 8/3/2005
Status: offline 		Gold is interesting. Take a look at these charts. http://goldinfo.net/yearly.html  Maybe one of the reasons gold was used to back currency is because it maintained a stable value for so many years. But in the early 1970's it just started going crazy and hasn't stopped. So I don't think it's a good investment at this point, unless it's for a short term gain. This bubble could fall quite a bit further.  A lot of people are just holding cash right now waiting for things to settle down, or buying bonds and treasuries. 

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RE: Economy : something I just don't understand - 11/17/2008 5:23:36 AM   
LadyEllen


Posts: 10931
Joined: 6/30/2006
From: Stourport-England
Status: offline 		The dollar is going down? I dont follow it except as it relates to the Euro and Sterling, both of which have lost value vs the dollar over recent months - cancelling out much of the reduced oil price and so fuel price here incidentally.

This begs the question, if the dollar is going down and Euro and Sterling are going down against the dollar, which currency/currencies are going up?

If none, then are we not in a deflationary spiral already, especially if commodity prices are falling too?

And on commodities - interesting report on last week's local news about all the recycling we're doing; whereas commodity prices had meant recycling companies were paying local authorities for the stuff they collect as refuse from our homes, the prices are now so low that the companies are going to start charging local authorities to receive and process the recyclables. Great news at a time when people cant afford to pay their local taxes due to losing their jobs, and said local authorities have lost around a billion pounds in the Icelandic banks.

E

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RE: Economy : something I just don't understand - 11/17/2008 5:26:48 AM   
BbwCanaDomme


Posts: 330
Joined: 5/22/2008
Status: offline
quote:

ORIGINAL: pahunkboy

Term,   dont be fooled.

Much of the precious metals are "on paper".   there is not proof that such metals physically exist.

None.

Why oh why do we never get far on auditing Fort Knox?

As upstanding as the banks are, does anyone beleive that the gold in their vaults is actually there?   How about that voodoo accounting did not count those reserves 2x ???

There is a huge disconnect between metals in your hand, and metals on paper.   Who do you trust?

Then consider Lindsey Williams prediction  of oil 50-60$    He said the price will go that low- and the powers will hoard up the metals- then the  increase comes.


Now  more then ever I urge people to question every report as being a spy op.

I beg you to pump the old folks for hints of the depression, etc.

Smash the fucken TV.  The RF fields in it rattle the skull.  It sucks you in- deluding the mind.

How does one explain the lack of real plans to solve todays problems?

Silver could in fact drop to $5 an ounce.  But if we have hyper inflation like Germany 1922, all the bail outs on the planet will mean nothing.

So I ask you, ...many on the planet will not be here 2013.  Giving the choice of starving to death, or suicide,  which is better?

RF beams effect the electric impulses in the brain.  The brain then has unnatural impulses.  So weather intended or not...

When you blow the heating block on the car, you can still drive maybe 10 minutes....  Thats where we are at.

Dont trust any report.  The powerful will do fake announcements to grab the gold for their private, bunker -vault.  You can count on it.



conspiracy theories are fun!

(in reply to pahunkboy)
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RE: Economy : something I just don't understand - 11/17/2008 5:35:51 AM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline
quote:

ORIGINAL: BbwCanaDomme

quote:

ORIGINAL: pahunkboy

Term,   dont be fooled.

Much of the precious metals are "on paper".   there is not proof that such metals physically exist.

None.

Why oh why do we never get far on auditing Fort Knox?

As upstanding as the banks are, does anyone beleive that the gold in their vaults is actually there?   How about that voodoo accounting did not count those reserves 2x ???

There is a huge disconnect between metals in your hand, and metals on paper.   Who do you trust?

Then consider Lindsey Williams prediction  of oil 50-60$    He said the price will go that low- and the powers will hoard up the metals- then the  increase comes.


Now  more then ever I urge people to question every report as being a spy op.

I beg you to pump the old folks for hints of the depression, etc.

Smash the fucken TV.  The RF fields in it rattle the skull.  It sucks you in- deluding the mind.

How does one explain the lack of real plans to solve todays problems?

Silver could in fact drop to $5 an ounce.  But if we have hyper inflation like Germany 1922, all the bail outs on the planet will mean nothing.

So I ask you, ...many on the planet will not be here 2013.  Giving the choice of starving to death, or suicide,  which is better?

RF beams effect the electric impulses in the brain.  The brain then has unnatural impulses.  So weather intended or not...

When you blow the heating block on the car, you can still drive maybe 10 minutes....  Thats where we are at.

Dont trust any report.  The powerful will do fake announcements to grab the gold for their private, bunker -vault.  You can count on it.



conspiracy theories are fun!


Remember that when YOU are asked to pay the 5 trillion $  tab on the (so far) 11 bail outs of 2008.

Right this minute- put your wallet on the keyboard.  I want you to remove any currency higher then a $1.  Then lay it under the mouse.  Now listen up, click the mouse.  Keep clicking.   Now I want you to disrobe.   But keep clicking the mouse.

YOU xxOL!!!!!!!!!!!!! 

The banks have TOLD us they mismanaged money.  paper money, electronic money.    Go ahead- trust the banks.  Be my guest.


You have NO guarantee there will be any food in 2013!   none.

< Message edited by pahunkboy -- 11/17/2008 5:45:39 AM >

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RE: Economy : something I just don't understand - 11/17/2008 5:42:00 AM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		Allright:

You might not get rich on gold/silver, the price could cut in half.  But in the long run, all currencies will be devalued in the next 5 years.

So what do you trust?  The dollar back by "full faith"  or   cash and carry- visa-vi- metals?

hedge funds have made the price fake.  here again- check prices real in your hand vs paper. how can there be the very wide historical spread????

the dollar will be like freequent  flyer miles, or bonus points.

the scarey thing is what comes after it.  some form of the chip- or what have you- where your ability to do trade is turned on or off.

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RE: Economy : something I just don't understand - 11/17/2008 6:46:21 AM   
Mercnbeth


Posts: 11766
Status: offline
~ Fast Reply ~
quote:

The dollar is down. We all know that. But at the same time precious metals are down. This does not make sense to me.

People who have hard commitments for obligations are selling off hard currency (metals) to pay those obligation. It's a buyers market for ANY commodity from oil, to gold.

Liquidity, or CASH is king right this minute, but stay tuned...

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RE: Economy : something I just don't understand - 11/17/2008 1:27:44 PM   
DesFIP


Posts: 25191
Joined: 11/25/2007
From: Apple County NY
Status: offline 		One other thing. People who need to flee a regime need easily transportable items of value such as gold. Yes, it may not be worth as much but a suitcase full of it will give you a safety net when you start out in a new country.

The only people I've ever known to buy large quantities of gold were French when the Socialists first won the election there. They squirreled large sums of money in gold in American safe deposit boxes so they would have a place to go, with funds available if the Socialists had nationalized everything. This is thirty some years ago folks and people really did feel the worst would come true.

Anybody feel they have to flee the country today? If not, then gold or gems are not the best way to go. But if you have to leave before they throw you in a death camp, you would want gold and gems. Easily transported.

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RE: Economy : something I just don't understand - 11/17/2008 3:15:09 PM   
pahunkboy


Posts: 33061
Joined: 2/26/2006
From: Central Pennsylvania
Status: offline 		Ive heard of jewelery being offered for whatever............ hopefully it wont get that bad.

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Profile   Post #: 19
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